The euro will fundamentally change the economics of this State. It has been heralded as ushering in a new era of almost permanently low interest rates and low inflation. But there have been fears, too, primarily about how an economy booming the way the Republic is can possibly cope with such money without growing too much and heading for a "bust".

In reality booms do not need to be followed by busts. Most forecasters now agree that the rate of growth in 1999 may moderate to around 6.5 per cent, a still very substantial rate compared with other EU countries.

The likelihood of gradually moderating growth over a number of years rather than the possibility of the economy hitting a brick wall is now almost universally accepted. But the problem is that it is difficult to be certain. As no forecaster predicted the huge explosion in growth which we have seen since 1996 they cannot be guaranteed to spot the downturn.

Mr Jim O'Leary, chief economist at Davy Stockbrokers, says this failure to spot the boom earlier may be because the economy entered a new paradigm, first pointed out by Prof Paul Krugmann in an essay last year.

Under this theory the Republic is a regional economy, rather than a national one, closer to an area like Seattle than to Britain or other national economies in the way it behaves. According to Prof Krugmann national economies are large, fairly closed and have relatively fixed supplies of labour. But regional economies, are small, open and have flexible labour markets. The key determinant in how fast they can grow is the size of the export base.

One of the implications of this is in an economy as open as the Republic's the concepts of maximum capacity and inflationary pressures have a different meaning. Because large economies like the US, Germany and Japan have almost fixed labour forces their sustainable long-run growth is far lower. So in the euro zone as a whole the labour force typically grows at about 0.3 per cent to 0.5 per cent a year. But in the Republic the rate is far higher at about 4 per cent or 5 per cent, similar to an area in the US such as Seattle, according to Mr O'Leary.

This means that inflationary forces can be kept at bay for much longer as the labour force reacts quickly. Of course there are other constraints such as infrastructure and the attitude of neighbouring states who could get envious.

These attributes are true even without us joining the single currency. But joining the single currency leaves us without two of the characteristics which generally describe a national economy, the independence of monetary policy in setting interest rates and exchange rates, and make the description even more compelling.

The single currency also means that interest rates and the inflations rate are likely to remain very low.. If we were not going into the single currency the governor of the central Bank, Mr Maurice O'Connell, has made it clear that rates would be much higher. It is even possible, according to Mr Oliver Mangan of AIB, that they could be 10 per cent. That would slow growth quickly and would certainly have a big impact on the housing market.

But instead of that house prices are now likely to continue growing, while economic growth is likely to be at least 6 per cent. Jobs growth will keep going, probably growing by as much as 5 per cent or even 6 per cent, according to the IDA.

One of the main reasons for our rapid growth has been the accelerating volume and value of exports. Next year exports are likely to continue growing but will probably moderate from the 20 per cent plus level achieved this year. The IDA has signed up more companies in 1998 than in previous years, although some are not as large as in the past. Three of the highest selling drugs globally will be made in the Republic. The anti-impotence drug Viagra is set for further sales growth following a £150 million investment in new facilities. SmithKline Beecham has only recently applied for planning permission for its plant to manufacture a much hyped anti-blushing drug, while Warner Lambert's cholesterol drug to be manufactured in Ringaskiddy will keep on growing well into 1999, according to the IDA.

The American Home Products plant in Kildare and Abbott in Sligo will also add to growth.

The electronic sector is also looking good with Dell on an upward trajectory and set to employ 1,500 more people and steady growth expected at Gateway, Apple and Intel.

Overall then the growth in multinationals will continue to create new wealth, more consumer spending as well as further expenditure on raw materials, wages and services. The trade balance is now expected to be close to £14 billion this year up from £9.25 billion in 1997 and is set to widen again in 1999.

The one problem is the state of the global economy with the outlook for Russia, Latin America or the Far East almost impossible to predict. A further crash on Wall Street could also have an impact as could an oil crisis. Apart from that growth will be hitting against physical capacity constraints and labour market shortages. Lower interest rates are also likely to feed through to a far higher rate of consumer spending, bringing possible capacity problems closer.

But is will also mean continuing upward pressure on house prices. According to Mr Tony Murphy who did most of the mathematical modelling for the Bacon report, around 85 per cent of house price rises can be accounted for by supply, the level of interest rates, levels of disposable income and demographics.

For next year rates will stay low, disposable income is likely to grow and the demographics remain positive.

According to Mr O'Leary the impact of lower interest rates may not be as positive as has been the case in recent years but will still be enough to see continuing house price rises. Much of the influence on interest rates came from expectations of lower rates rather than the lower rates and that has now come into the market.

But supply does have the capacity to be an inhibiting influence. It will depend on how fast new supply comes on board and how quickly new land is freed and rezoned. Many observers also expect to see a continuing flow of investors back into the market despite the changes in treatment of tax on rental income. Part of the moderation reflects the fact that the increase in the first three months of the year was enormous and simply could not be replicated quarter after quarter over a year or year and a half.

So with continuing growth, tens of thousands of new jobs and low interest rates and inflation 1999 should prove to be another year of records for our economic statistics. But of course there are some clouds on the horizon, chief among them the global environment .