The International Monetary Fund (IMF) has said that it believes that increases in Ireland's GDP could be artificially inflated by offshore manufacturing carried out on behalf of multinational companies.

Irish growth is expected to come to 5 percent, this is the fastest growth-rate in the EU - and much higher than the 2 percent that the IMF had predicted.

The body had previously flagged this issue when it last visited Dublin - and Dr Donal Donovan of the Irish Fiscal Advisory Council (IFAC) has also said that Irish growth figures should be taken with a "pinch of salt."

The IFAC found that almost half of Ireland's growth in the first half of 2014 could have been made up of 'contract manufacturing'.

This is when businesses that are registered in Ireland transfer raw materials from another country - process them in a second - and sell them in a third.

These count as 'Irish exports' - but none of these activities take place in the State.

Apart from this warning - the rest of the report is positive about the Irish economy - noting an increase in investment, and a decrease in the unemployment rate.

In the report the IMF predicts that the Irish economy will grow by 3.5 percent in 2015.

The IMF staff report comments that "political challenges" to Government policy has increased - saying: "Polling for the governing parties has deteriorated in 2014 and widespread protests against water charges prompted the authorities to cut fees and cap future charges."

Although Ireland has exited the EU-IMF bailout, the country is still subject to twice-yearly meetings with the Troika until 75 percent of its loans are repaid. These reviews are part of the terms of the original bailout deal.