IT has been a record year for the economy and for business. Across many sectors of the economy companies, are amassing record profits and this Christmas the tills were ringing. In the economy as a whole economic growth and job creation have been extraordinarily strong, placing Ireland well ahead of any of the other EU members. For the moment, at least, Ireland is Europe's boomtown.

Inside this publication developments in 1996 are put in context and the outlook for 1997 across all the main areas of the economy is assessed. Strong economic growth is clearly evident in many sectors. The retail sector has had its best year in a long time, and the strength of consumer spending and the economy in general has attracted major new investment in the sector.

The other major success story of the year has been the strength of industry. Indigenous industry has had a solid year, but the headlines have been grabbed by a succession of major inward investment projects, capped by IBM's announcement earlier this month that it is to create 2,850 jobs in Mulhuddart, west of Dublin. The strength of inward investment over the past couple of years should help support economic activity for a sustained period, as the new investment projects move from construction to production.

That is not to say that each and every part of the economy has had a trouble free year. Conditions have been mixed for the food business and particularly for the beef sector which has had to contend with the BSE crisis. And while the banking industry is as profitable as ever, many of the players in the financial markets face losses moving towards monetary union. The major banking groups are set to lose a considerable portion of foreign exchange revenue.

Indeed monetary union is looming, ever closer, posing new challenges for all areas of the economy. The approach to the single currency will be one of the main preoccupations for 1997 both for the Government and for business.

For the Government and the Central Bank, next year will be crucial as economic performance will count towards qualification for the single currency.

The Central Bank will thus be closely monitoring the rate of inflation, while the Minister for Finance, Mr Quinn, will want to make sure that the budget figures ensure that the fiscal criteria are fully met.

Business is also starting to focus on monetary union. The major banking groups are already some way down the road in terms of assessing the implications of monetary union, but many smaller businesses have only now started to look at the consequences.

What else will dominate the business headlines in 1997? Telecommunications is clearly one of the fastest moving sectors and Telecom Eireann is moving into a new era. Its strategic alliance with KPN and Telia has finally been signed, opening a new era for the company. Also, the State's second mobile phone service is due to be launched and a third mobile licence for local networks may, be issued.

Next year will also be an important one for the financial markets. Most stock exchanges had a good run this year, rewarding investors with healthy returns. But there is increasing concern about the high valuation of equity markets, while Government gilt and currency markets may be subject to volatility if there is any uncertainty about monetary union.

Overall heading into next year the economy appears to be in good shape and growth forecasts are good. But monetary union will bring new challenges which have yet to be assessed.