IBEC says Irish growth could be undercut by deteriorating conditions for our major trading partners.

The group which represents Irish business is forecasting GDP growth of 3.7% this year.

However it warns that Brexit remains a threat, and the fallout from coronavirus is far from clear.

In its first quarterly economic outlook for 2020, it says the Irish economy has "continued on its strong growth trajectory".

It says this is proven by recovering consumer sentiment and business confidence in the early part of this year.

"Consumer spending, employment and investment are all growing rapidly, while household incomes are now increasing in every region", the group says.

Source: IBEC

It points out that this momentum is being achieved "despite external pressures" in the global economy, with Brexit posing an ongoing challenge and the impact of the coronavirus outbreak being felt through global supply chain disruption and reduced demand.

"Sustaining growth is therefore dependent on managing change in the external environment," the outlook adds.

Ibec chief economist Gerard Brady said while the outlook for Ireland remains positive, conditions for our major trading partners are less favourable.

"Annual growth for the EU was just over 1% last year, the lowest rate since 2013, on the back of a difficult year for manufacturing.

"The potential for an escalation in US tariffs applied to EU goods this year, along with the reduction in global growth from a slowdown in China, each pose an additional risk to growth in our key trading partners."

"Domestically, congestion and quality of life issues remain key challenges, with successful delivery of housing, transport and affordable childcare vital to attracting more people into the workforce and easing an increasingly strained labour market.

"In the wake of the general election, the electorate has spoken.

"No matter what the composition of the next government, voters' expectations that the new Dáil will implement effective solutions to societal challenges have increased substantially.

"This will require a renewed form of social dialogue among key stakeholders and a new Commission on Taxation."

"In 2020, the year for the economy will be bookended by the impact of the coronavirus on global demand and, toward the end of the year, by the increasingly likely spectre of a hard Brexit.

"In between, we are likely to see major change to global corporate tax rules and an election in the US.

Source: IBEC

"Fortunately, the strong momentum in the Irish economy indicates that Ireland is well positioned to weather these headwinds if the resources of several years of sustained growth can be effectively deployed to manage change."

Fergal O'Brien from IBEC told Newstalk Breakfast earlier capacity constraints are now a threat to the economy.

"We've gone through a period of time where we've been growing jobs between 2.5/3% every year for the last five or six years - we're not going to be able to continue that pace of employment growth over the coming years.

"We're now touching full employment.

"We have significant constraints in terms of housing, in terms of infrastructure capacity in the economy.

"These are actually the number one areas of concern for business".

Read the full outlook here