The ESRI is predicting that economic growth is likely to hit 1.8 percent this year and 2.7 percent next year.

In its latest economic forecast, the body says its predictions are based on the assumption that the European economy will turn to growth next year.

The estimates are ahead of those of the government, which has previously said it expects the Irish economy to grow by 1.3 percent this year and 2.4 percent next year.

Growth in GDP of 1.8 per cent is expected this year, growing to 2.7 percent next year, reflecting stronger growth in exports and domestic demand.

But the ESRI is warning that unemployment will remain high, with predictions the rate will drop just below 14 percent next year.

The report's authors David Duffy and Kevin Timoney also caution that if the anticipated international upturn does not occur, then the outlook for the Irish economy is less positive.

GNP v GDP

The ESRI has also taken the opportunity to explain that, traditionally, GNP has provided a better measure of economic activity in Ireland. However, this has been affected in recent years by the profit flows of redomiciled plcs. Adjusting GNP to take account of these flows finds the contraction in the Irish economy was much deeper in 2009, the Irish economy actually contracted in 2010, rather than showing moderate GNP growth, and was marginally weaker in 2011, while GNP growth in 2012 was approximately 1 percentage point lower than official estimates. If the pattern persists then adjusted GNP growth will be lower than forecast and any boost to growth from a fall in the balance of payments surplus will be smaller than had been previously anticipated.

You can view the full report at www.esri.ie