Economy to grow by more than expected - Central Bank

The Central Bank is revising upwards its economic growth forecasts for Ireland.

In its latest Quarterly Bulletinthe bank projects the economy will grow this year by 2.1%, up from its previous projection of 2%.

It also predicts economic growth of 3.2% next year on the back of improved economic conditions.

The bank said Ireland's emergence from the bailout deal has led to an improvement in the outlook for the country, with employment on the increase and consumer spending picking up.

"Ireland has emerged from the EU/IMF Programme against a background of increased market confidence in the outlook for the country’s economic performance and policy prospects," the bank said.

"This has been reflected in an improvement in the market’s assessment of Ireland’s creditworthiness, helping the Sovereign and domestic banks to regain access to market funding at, increasingly, more favourable rates."

The bank said It expects unemployment to fall to 11.9% by the end of the year - down from an earlier forecast of 13%.

"Encouragingly, the most recent data indicate that employment has grown strongly over the past year," it said.

"Initially, the recovery in employment was confined to part-time jobs, however, recent quarters have seen steady growth in full-time employment, which appears to be broadly based."

However the Central Bank says that while much has been achieved, ensuring a sustainable recovery will require further reductions in both public and private debt levels, restoring the banking system and reducing the rate of unemployment.

And it says sticking to the targets and policies set out by the troika is essential to overcome the challenges.