In the past week, some of this State's senior academics have warned there are similarities between our present situation and the run-up to the crisis in East Asia late last year.

The prospect of an Asian-style collapse in property and share prices, a sharp loss of consumer confidence and the economy grinding to a virtual halt is frightening.

But how much attention should we pay to the prophets of doom? One point is that no economist predicted this boom, and the profession has struggled to explain the economy's remarkable performance over the past few years.

But growth rates in the double digits - and until last month below-average inflation - fly in the face of conventional economic patterns.

As a result, it seems hard to credit that anyone can predict accurately what will happen as we enter unchartered water on January 1st, when the single currency begins.

But whatever happens, the economy must slow. It has expanded rapidly and growth has run to about 10 to 12 per cent over this year and last - a rate of expansion that cannot be sustained indefinitely.

Economic theory suggests an economy can grow only by a certain amount before the buffers are hit: a shortage of labour or other problems appear and inflation comes into the system.

Ireland has the advantage of a young, educated population moving into the jobs market, a key factor in allowing the economy to grow so rapidly over the past couple of years without stoking wage pressures.

But in the longer term even optimists believe the economy could probably not sustain annual growth of more than 5 per cent.

So the question is: can we achieve a gradual slowdown towards this kind of growth rate, or are we heading for a crash-landing, which would result in major dislocation and job losses?

There are clearly problem areas in the economy: rising house prices and ever-increasing borrowing for other purposes could leave borrowers exposed if growth slows. Skills shortages are also emerging and many companies are reporting difficulties hiring people.

Other issues such as congested roads could also act as a brake on growth, but are probably not enough to depress the economy seriously in the short term.

So what is the way forward? Many people believe Partnership 2000 and its predecessors have helped recent growth. By holding wage demands in check - in return for tax cuts - they have allowed the economy to grow without serious inflation.

But fears are now widespread that the agreement may be falling apart. In the public sector, the Garda's "blue flu" protest and other disagreements show major tensions emerging. In the private sector, widespread pay increases - significantly more than agreed - are being granted.

Large-scale wage rises in the computer sector are well documented, with many key people now able to write their own pay cheques.

Even the Central Bank had to agree a special deal for staff in this area. But increases are spreading to other areas.

Skilled tradesmen had a 26 per cent rise in wages last year, with general labourers not far behind. Blocklayers are thought to be earning as much as £750 a week.

Indeed, Davy Stockbrokers recently headlined a research piece "Forget Bonds, become a Brickie".

In addition, many small firms report recruitment difficulties at all levels as unemployment falls. But in other areas there is still no shortage.

The banks and the gardai still experience great interest from potential employees, as do other traditional sectors.

And the problem for any successor to Partnership 2000 is that at a time when demand is increasing and jobs are easy to find it will be almost impossible to stop wages rising as a way to attract and secure key employees.

It is also possible, as Prof Brendan Walsh of UCD says, that there may be little value to the economy in negotiating another agreement, bar some savings on negotiation and bargaining.

House price rises, which many do not expect to slow as a result of the Bacon report, are another problem. While house prices themselves do not feed into the inflation rate, insurance costs and larger repayments as mortgages rise in size do.

In addition, householders sitting on large capital gains could feel wealthier and may be more willing to borrow and spend more on the back of the wealth they feel they have in their home, as happened in Britain in the late 1980s.

Under normal circumstances the Central Bank would react as the Bank of England has done and raise interest rates.

That would slow the economy down somewhat; people would have less money in their pockets and would be less confident that another rise was not around the corner.

But now we are entering the single currency the bank no longer has that option. It has also lost all control over the exchange rate and trying to influence the currency's value to get us out of a tight spot will no longer be feasible.

Because of these restrictions, there has been a growing body of opinion warning the Minister for Finance, Mr McCreevy, that he must not risk adding fuel to the fire. Large-scale tax cuts or big spending increases in the 1999 Budget could jeopardise the economy, they say.

But these so-called fiscal measures are really only the poor second cousins of the big-hitting monetary instruments of interest and exchange rates.

Economists such as Mr Jim O'Leary, chief economist at Davy Stockbrokers, claim there is little to be gained from taking this direction.

In fact, Mr O'Leary argues that tax cuts may even be beneficial in the medium term as they could go some way to attracting even more emigrants home - something which badly needs to happen if the economy is to keep growing and to have the supply of skilled employees it requires.

It may be counter-productive, he argues, to restrict Government investment spending, which is used for building roads and putting in other long-term investments.

That leaves only current spending, the bulk of which goes on public sector pay. The political reality is that the Government will be lucky to get away with small rises in this, of all spending items.

SOME economists take a more relaxed view and do not believe we are heading for a general inflationary bubble. Mr Eunan King of NCB Stockbrokers, for example, says the key to Irish inflation is the level of price rises elsewhere in the world, which are then transmitted to us through imports.

Thus the recent rise in inflation is more than likely a result of a falling pound last year, meaning pressure on prices should ease later this year.

As a result, he argues, it is better to be concerned about housing and traffic bottlenecks, as well as education and immigration policy, to make sure the right people with the right training are available to meet the demand.

The Government can introduce policies to address these issues in areas such as investment and education. It can also hold tight on awarding pay rises and tax cuts to higher earners, but if the rise in inflation continues and the economy threatens to go out of control, policymakers will be almost helpless as we head towards monetary union.

Whether we will be lucky and benefit from generally low inflation elsewhere - or crash into the economic buffers - will to a large extent depend on luck and what happens internationally.

So far the Asian crisis seems to be holding back inflation in countries such as the US and even France. And most people believe monetary union should lead to a low inflation zone. But the immediate risk is an international slowdown of any kind - which could leave us exposed.

The longer-term danger is that inflation will start to creep into all areas of the economy - including wages - and gradually hit our competitiveness when we most need to be building on recent success as we head into monetary union.