Consulting group PricewaterhouseCoopers (PwC) says it expects Ireland's economic growth rate to be almost three times the euro zone average this year.
In its European Economic Outlook, the consulting group anticipated a 5 per cent rise in GDP, well ahead of the average of 1.75 per cent anticipated for the euro zone. However, it expects growth to accelerate to 2 per cent the following year.
The report indicates that export growth from Ireland should accelerate this year with wage inflation also accelerating due to shortages in skilled employees.
However, for next year PwC highlights that a loss of competitiveness could see Irish growth slowing to 4.75 per cent.
It said the German economy remains fragile while French and Italian growth is expected to be only slightly stronger at around 1.75 per cent this year.
A stronger performance is expected from the Spanish economy with growth there expected to exceed 2.5 per cent.
PwC said Euroland inflation is expected to remain below 2 per cent over the next year, excluding oil price effects, allowing the ECB to keep interest rates on hold for the remainder of 2005.