The Organisation for Economic Co-operation and Development (OECD) has further reduced its growth forecasts for the Republic's economy and has predicted Irish GDP growth will sink to 3.25 per cent this year.
For 2004, the Paris-based think tank foresees a limited recovery to GDP growth of 4.5 per cent, supported by private consumption and investment.
In its last report, published in November, it had predicted growth of 3.6 per cent for 2003 and growth of 4.5 per cent for 2004.
The OECD's predictions indicate the Irish economy continues to ourperform its EU neighbours. GDP growth in the common currency area is expected to expand by just 1 per cent this year - the same as in Japan - and by 2.4 per cent in 2004.
However, inflation in the Republic this year will remain among the highest in the euro zone, though slackening wage pressures should bring it down to 3.25 per cent in 2004, as measured by the harmonised index.
The Irish housing market is expected to remain buoyant, but public finances could be eroded by "failure actually to stop the rapid increase in public employment and to control public sector pay", the OECD said.
It also noted that Ireland's export-driven economy remains "vulnerable to a further appreciation of the euro and geopolitical risks".
(Additional reporting Reuters)
