Ireland continues to stand out as a "growth beacon", and it will forge ahead in 2007, according to the latest outlook from Goodbody Stockbrokers.

In its Irish Equity Outlook 2007, the stockbroking firm predicts economic expansion will peak next year. GDP growth is forecast to reach 5.6 per cent, which would represent the highest rate of growth since 2002.

Goodbody anticipates that growth will be driven primarily by consumers next year, rather than being mainly export-led as in previous years. Growth in consumer spending is expected to hit 7 per cent in 2007, buoyed by the "SSIA effect" coupled with strong employment growth.

However, the Goodbody report highlights the risk of a delayed response to interest rate rises which may yet filter through in the form of a moderation in consumer spending in the future.

The report says the housing market began to soften this year, and construction activity also started to moderate.

The economy experienced an "inflation shock" this year, with the consumer price index rising to 3.9 per cent, from 2.4 per cent in 2005. According to Goodbody, mortgage interest and energy costs contributed to approximately half of this price rise. However, Goodbody predicts that inflationary pressure will ease off next year.