The Taoiseach warned last night that Ireland's economic growth is set to halve this year to about 2.5 per cent, below the Government's projection last week of 3 per cent.
"This year the economy will grow at approximately 2.5 per cent, with even the most conservative commentators predicting an upward curve to 4 per cent growth in the years afterwards," Mr Ahern told the Dublin Chamber of Commerce last night.
Longer term growth prospects remained strong however, despite the volatility on international financial markets and the expected slowdown in the Irish housing sector, Mr Ahern said.
"Although these are slower rates than we have been accustomed to in recent years, they show the steady and sustainable growth which remains a solid bedrock for the Irish economy and Irish jobs," Mr Ahern said.
The Government would not try to boost growth by loosening budgetary discipline, he added.
The Government "will - and must - take prudent decisions with a firm eye on the long term", said Mr Ahern, who also pointed out that seven million people could be living on the island by 2020.
Last week, Minister for Finance Brian Cowen forecast economic growth of 3 per cent, down from around 5 per cent expected for 2007 and 5.7 per cent recorded in 2006.
Mr Cowen warned that unemployment was likely to rise this year and any US recession would have some adverse effect on the Irish economy.
The Central Bank last week cut its forecast for GDP growth to 3 per cent from 3.5 per cent in its previous bulletin.
An end to Ireland's decade-old property boom, when house prices quadrupled, is expected to lead to a sharp drop in house building this year, which in turn is set to dampen the broader economy.