The Irish economy will continue to grow by 5 per cent both this year and next, the Organisation for Economic Co-operation and Development (OECD) said today.
In it's twice-yearly economic outlook, the Paris-based think tank said that growth would remain strong despite a "marked slowdown" in exports.
However, the OECD warned "the current pattern of real wage increases in excess of productivity growth could compromise future economic performance and entails inflationary risks.
"It is important that wage settlements in the current bargaining round reflect productivity developments," it said in a report.
The organisation also argued that rolling back "anti-competitive regulation" in services should be a priority as it would spur productivity growth and restrain inflation.
Globally, OECD chief economist Jean-Philippe Cotis said although the world economy was buoyant overall it was still vulnerable.
"The euro area would grow slightly above trend over the next few months, as would Japan and the United States," Mr Cotis said.
"By end-2007, economic slack will have been more than eliminated in Japan and North America, but ample excess supply would still persist in Europe, continuing to exert disinflationary pressure," he added.