The latest quarterly briefing by the Economic and Social Research Institute (ESRI) forecasts domestic demand to rise by just 0.6 per cent this year and GDP to shrink by 2.7 per cent.
The ESRI has backed the Government over its handling of the 5 per cent spending rule in the budget.
It follows criticism last week that the Government was guilty of 'over-spending' amid inflationary pressures.
The research institute suggests the tax and welfare measures announced in Budget 2024 will insulate most households from rising prices next year.
“Not to be the Scrooge before Christmas, but tidings of good news are not what we’re bringing for the overall economy,” said Conor O’Toole, an associate research professor at the ESRI. “The Irish economy is slowing. The external-trade sectors are slowing quicker. There are international headwinds to global trade that affects a small, open economy like Ireland.”
