Ulster Bank has revised upwards its economic forecast for the year, predicting Ireland will experience GDP growth of 1 per cent in 2010.
This compares to previous forecasts of a contraction of 0.5 per cent. But although the economy may be showing signs of improvement, there will be no "quick fix" for the jobs crisis, the bank said.
Ulster Bank said there have been indications that growth is occurring outside the multinational firms, with the output of "traditional" manufacturing segments, including the food and beverage sector, appearing to recover.
The bank said consumer spending is expected to record a positive second quarter as car sales and other sales volumes grew in the first half of the year.
However, gross national product (GNP) remains weaker, expected to contract 0.4 per cent compared with a fall of 1.2 per cent previously predicted.
The banks said Ireland's recovery is still primarily dependent on the export sector. The sector is vulnerable to a stalling in recovery in overseas markets.
"The export-led recovery now underway in Ireland reflects the pick-up in the global economy which has been in recovery mode for over a year now," Ulster Bank chief economist Simon Barry said.
"Of more concern are the indications of a slowing global economy, notably in the US where a series of recent economic numbers have disappointed to the downside. Our base case is that the global recovery will remain broadly on track, albeit at a gradual pace."
The labour market, meanwhile, will weaken in further in the short time, with unemployment continuing to climb. Ulster Bank predicted a peak of between 13.5 and 14 per cent later this year. It is the nature of the recovery that will help keep job creation low in the short-term, the bank said, with export sectors considered to have little influence in direct job creation.
"The international experience of the lags between the return to positive economic growth and employment gains over the past year points to the possibility of some slight net job creation here by the end of this year," the report said.
"However, the nature of the early stages of the Irish recovery, driven as it is by exports, argues against much of an early uplift in employment. Export growth is not labour-intensive, a point highlighted by the fact that there was very little direct net job creation in exporting firms over the pre-crisis years of 2002-2007 - a period of relatively buoyant demand in Ireland's key trading partners."