The Economic and Social Research Institute (ESRI) has raised its forecasts for growth in gross national product for this year from 4.3 per cent to 4.8 per cent.
The institute published its new forecast in its Quarterly Economic Commentpublished today.
The ESRI said this level of expansion can be maintained throughout next year if risks such as an oil shock can be avoided.
However, the ESRI report warned the Government not to introduce a successor to the Special Savings Incentive Account (SSIA) scheme when 1.13 million accounts mature in 2006 and 2007. It says there is no economic justification for such a move.
It also warned that a decline in housebuilding could have a negative effect on the economy. It points out that the construction of 80,000 houses this year will account for one-fifth of economic growth. A deline in this would therefore eat into growth in the future, it says.
The institute expects an Exchequer borrowing requirement of €705 million this year, with this rising to €1.09 billion in 2005. On Budget Day last December, the Department of Finance predicted an Exchequer deficit of €2.8 billion.