Global bank Citi has raised its growth forecast for the Irish economy in 2014, and is now predicting GDP growth of 2.1 per cent for 2014 and 2.2 per cent for 2015. It expects inflation to fall to 0.3 per cent this year, before rising again to 0.9 per cent in 2015.

Speaking in Dublin today, Willem Buiter, chief economist with Citi, pointed to an expansion in employment and a recovering housing market as factors behind the move to upgrade the bank's growth forecast.

Although he noted that Ireland’s public finances remain “challenged”, he added that Citi’s forecast is for the public debt/GDP ratio to edge down this year after peaking at 125 per cent in 2013.

Taking a broader global view, Mr Buiter said that global growth is picking up, “mainly driven by the advanced economies”. While emerging markets will likely be the main driver of global growth in future years, “occasional hiccups and reversals loom”.

Citi is forecasting GDP growth of 1.1 per cent for the Euro area this year, and 1.3 per cent in 2015.