Friends First, the financial services group, has raised its economic forecast for 2002 and now predicts the economy will grow by 3.8 per cent this year.
The increase - from the 2.3 per cent forecast at the end of last year - places Friends First's chief economist, Mr Jim Power, among the more bullish commentators.
Mr Power singled out stronger than expected consumer spending as a significant contributor to better than expected growth prospects.
He now believes that consumer spending will rise by 5 per cent this year rather than the 3 per cent he had originally expected.
"The US economic recovery is stronger and more robust and this will feed into the Irish economy via employment," he said yesterday.
Unemployment will peak at a lower than expected 5 per cent this year, he said.
Mr Power echoed the views of the Economic and Social Research Institute, which has identified control of public spending as a pre-requisite for sustained economic recovery.
The growth in current spending over the life of the next Government will have to average 7 per cent a year or the Irish deficit will test the European Union's rules within 18 months, believes Mr Power.
"Governing Ireland will be considerably more complicated over the next five years than over the past five years and difficult policy choices and decisions will have to be made," according to the Friends First Quarterly Economic Outlook published yesterday.
Mr Power also found common ground with the comments on inflation made by the ESRI in its Quarterly Economic Commentary.
Like the ESRI, he predicts that inherent inflationary tendencies will continue to push wages higher and undermine internal and external competitiveness.
He advocates the introduction of competition into areas such as the services sector as a possible remedy in the absence of another national wage agreement.
A successor to the current Programme for Prosperity and Fairness is in any case of only limited value given the failures of the current agreement, he suggests.
Friends First is also upbeat about the housing market, which is "starting to pick up again as the negative economic forces that undermined it last year are starting to become less influential".
Prices will rise by 8 per cent this year.
"The housing market is now secure, negative equity has disappeared as a threat, but house price inflation over the next five years is likely to be less than half that seen over the past five years," according to Mr Power.
