Economic growth here will top the EU league this year and next and also be ahead of most other industrialised economies, according to new forecasts from the International Monetary Fund (IMF).
Its latest economic outlook is upbeat on economic growth internationally this year, but says higher oil prices threaten world growth prospects and forecasts some slowing next year.
The IMF predicts that the Irish economy should grow by 4.7 per cent in terms of gross domestic product (GDP) this year and 5 per cent in 2005. This compares to an average in what the IMF calls advanced economies of 3.6 per cent this year and 2.9 per cent in 2005.
The IMF has raised its 2004 world growth forecast to 5 per cent, the highest level in three decades, but said sharply higher oil prices had sapped the recovery.
The last time global growth came close to 5 per cent was in 1984, when it hit 4.8 per cent. While advanced economies are forecast to grow by less than 4 per cent, the average is pulled up by a boom in many newly industrialised Asian economies - such as Singapore, Hong Kong and Taiwan - where growth is forecast to average 5.5 per cent, and by strong growth in India and China
In its Autumn World Economic Outlook, the IMF said the global expansion, while still solid, was likely to weaken.
The IMF downgraded its 2005 outlook to 4.3 per cent from an April forecast of 4.4 per cent.
IMF chief economist Mr Raghuram Rajan said the balance of risks had shifted to the downside, with further oil price volatility a concern. Still, he said the sharp rise in oil would likely have only a moderate impact on growth and inflation in the industrialised world, while warning that emerging markets were more vulnerable.
Worries about oil prices have heightened as crude oil prices soared to above $50 (€40.55) a barrel this week - the latest peak in what some strategists fear could be a long upward creep on burgeoning demand from China and India, and fears over supply disruptions in the Middle East.
US crude futures eased on Wednesday on unexpectedly high oil stocks and news that Nigerian rebels had agreed to a ceasefire. They were trading last night around $49.30.
But despite the diminished steam, the IMF said the US was still the driving engine for growth, with support from Asia and increased activity in Latin America and Sub-Saharan Africa.
The IMF downgraded its 2004 and 2005 outlook for US growth, forecasting expansion at a rate of 4.3 per cent this year, down from 4.6 per cent, and at 3.5 per cent in 2005 rather than 3.9 per cent.
US official figures yesterday showed US GDP grew by 3.3 per cent in the second quarter, down from 5.4 per cent in the first quarter and the slowest rate since the first quarter of 2003.
Additional reporting Cliff Taylor
