There is a warning that a no-deal Brexit in the UK could see Irish GDP growth slow to just 1.3%.
Growth for the economy in general has been revised downwards based on a gloomier global outlook.
However EY says the labour market here continues to beat the odds.
GDP growth for 2020 has been revised to 3.0% from 3.3% on the back of a weaker global economic outlook and continued Brexit uncertainty.
And growth is projected to slow further to 2.8% in 2021, assuming a hard Brexit is avoided.
While a no-deal Brexit outcome could see 2020 GDP dip to just 1.3% - although Ireland would avoid a recession in this scenario.
Overall growth in 2019 is projected at 3.7%, down from 4.1% projected in June.
The EY Economic Eye says: "This moderate downward revision, based on the assumption of an orderly Brexit, is contrary to the continued strength of the labour market which remains in stark contrast to the downbeat backdrop."
Northern Ireland recession
The all-island report also finds that Northern Ireland's economic growth rate for 2020 will be lower than the Republic of Ireland at 1.1%, and in 2021 will increase to 1.6%.
The region has now slipped behind the UK average growth rate after a relatively strong 2018, with a no-deal Brexit projected to be sufficient to push Northern Ireland into recession.
The report finds that the more challenging global backdrop is at odds with what people are feeling in Ireland - with positive labour market growth.
While job growth in Ireland has also been revised downwards from 2.8% in 2019 to 2.2% in this latest forecast, the firm's predictions for 2020 and 2021 remain the same at 1.8% and 1.6% respectively.
This demonstrates that the pace of growth is showing tentative signs of slowing - however it remains impressive, with all-island employment at its highest recorded level at 3.2 million.
The report finds that in the event of a difficult Brexit there will be jobs lost, but these are unlikely to be in the locations or with the skills profiles that are in demand from employers for whom Brexit is not a major consideration.
As a result, recent upward pressure on pay levels is expected to continue for businesses, with wage inflation in Ireland predicted to be 3.6% in 2019, and the UK enjoying a similar level at 3.5%.
"Dual threat"
Professor Neil Gibson is chief economist for EY Ireland.
He said: "The external economic climate is as challenging as it has been for a decade.
"Despite strong domestic tailwinds, the dual threat of trade wars and Brexit have the potential to derail Ireland's rapid growth.
"Estimates of a no-deal impact vary considerably, but they all suggest there will be a cost in the form of disruption across the island.
"Regardless of the overall macro impact, the local and firm-specific effects could be devastating for some, with no-deal job losses likely to have a very particular sub-regional pattern.
"There is no doubt that the resilience and adaptability of businesses will be tested, as will the resolve of Government, but the remarkable level of growth and job creation over the last five years is no small feat and places Ireland on a solid footing."
Simon MacAllister is Brexit lead for EY Ireland.
He added: "Our latest outlook is slightly weaker, and it is clear that even assuming a Brexit deal, trade wars and an unsteady global backdrop are beginning to take their toll on Ireland's small, open economy.
"Warning signs are flashing in our economic data but also in financial markets and many business sentiment surveys.
"With recent surveys indicating that there are low levels of Brexit preparedness amongst Irish firms, businesses need to be considering now what a further extension or a no-deal could mean for them, and what their key actions will be."
