The ESRI has called for a series of measures including increased taxes and more borrowing to maintain competitiveness in a report ahead of this year's budget.
Budget Perspectives 2008is being presented at the Budget Perspectives Conference today and calls for measures on public sector pay and the minimum wage to help maintain growth.
The report says a "substantial decline" in competitiveness together with changes in the type of economic activities that make up the domestic economy suggest that Ireland is entering a phase of moderate growth, marked by "a non-trivial degree of downside risk."
The ESRI says the Government has a number of options that would help restore competitiveness and could counter the impact on employment of an economic slowdown.
The report says there are "clear signs" the economy is slowing but that it is slowing to a level that is "still very respectable by European standards."
However, the ESRI warns that a transition to more modest growth could pose problems, and it is calling for changes in public expenditure and higher taxes on consumables despite a high budget surplus.
The report calls for restrictions on the growth of the minimum wage, which the report says is the second highest in Europe, and it has urged limits on public sector pay.