The broker said that Ireland is growing at an “exceptionally rapid pace” and is the fastest growing in Europe
The broker has also said the unemployment rate will fall to 9.6pc next year, it is currently just above 11pc.
The upbeat report also predicts that the recovery will be more broad-based as consumer spending and investment growth accelerate.
“We expect the government deficit will fall to 2.9pc of GDP next year based on a €500m adjustment in Budget 2015,” said Conal MacCoille, chief executive at Davy Stockbrokers.
At the top end of guidance, some commentators had called for an adjustment of €2bn – Finance Minister Michael Noonan has already indicated that it will be smaller than this but the figure is not yet known..
Davy is also guiding GDP for 2015 and 2016 of 3pc and 2.8pc respectively.
Goods export volumes have bounced back in 2014 as the negative impact of the pharmaceutical patent cliff has waned, Davy added.
However, he warned that there are laggards in the economy including the construction sector.
“The IMF and EU Commission estimate the output gap is currently close to 1pc of GDP and will close to zero in 2015 – suggesting there is little room for the economy to bounce-back. “This is a bleak view, especially given GDP is still 5pc below peak levels and the unemployment rate at 11.5pc.”
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