The economy in the Republic is expanding at more than three times the speed of growth in Northern Ireland, accounting firm EY says in a new forecast.

The firm, formerly known as Ernst & Young, projects that gross domestic product in the Republic will advance by 5.8 per cent this year and by 4.3 per cent in 2016. In Northern Ireland, however, the firm has downgraded its 2015 forecast to 1.7 per cent from an earlier 2 per cent projection.

"Economic performance continues to be uneven across the island, despite an overall decline in unemployment in all regions," the firm said in its EY Economic Eye winter forecast.

“Urban centres have experienced significantly faster growth than in rural areas, enjoying the highest levels of high value-added employment and resulting economic benefits.

“In addition, the increasing pull of city living, particularly amongst young graduates, is further diverging growth from more rural areas,” it said.

Mike McKerr, managing partner of EY Ireland, said it was crucial to avoid the “costs of success” in cities.

“Employees and investors alike continue to be drawn to cities, due to the lifestyle advantages, better infrastructure and the talent cluster they offer,” he said.

‘Urban success story’

Avoiding high prices, congestion and property shortages was crucial to continue the “urban success story”, he added.

Neil Gibson, economic adviser to EY, said exceptional growth rates in the Republic this year were unlikely to be maintained into 2016. However, he said domestic growth in the Irish economy was now matching the dynamic export sector.

“Threats from slowing global growth and risks from economic overheating are the potential challenges that lie ahead,” he said.