The Taoiseach has warned of the "difficult economic challenges" that lie ahead and said that businesses in the State must remain competitive or face extinction.
Delivering the key note address at the Irish Management Institute's (IMI) National Management Conference in Killarney this morning, Mr Ahern said that unless inflation could be brought under control and reduced to 2 per cent there would be a serious risk of losing jobs and markets throughout the State.
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Inflation stands at more than 5 per cent, but Mr Ahern insisted the Government has a "clear strategy" that will continue to make the Republic competitive.
This strategy involves drawing on the success of the 1990s boom, he said.
Factors included tourism, attracting investment, improving education and exploiting the potential of new technology had all contributed to the "phenomenal" experience of the "Celtic Tiger", when the Republic saw a 60 per cent increase in take-home pay.
"Clearly progress over the last couple of years has been slower," the Taoiseach said. "But let us be very clear - the Irish economy has performed extraordinarily well by comparison with our European and international partners".
He said the economy had performed significantly better than many others in terms of output, exports, jobs and public finances, adding: "There is much about our present situation which our partners truly envy".
However, Mr Ahern admitted there were many vulnerabilities in Ireland's present situation.
He said there was no doubt the Republic had lost competitiveness through increased operating costs and slower productivity. "What I want to stress here this morning is that we can and we will meet these challenges, head on," he insisted.
He added there was now a challenge to equip people, businesses and policies to embrace change and enhance their capacity to innovate and apply new technologies. Ireland should continue to be a place where dynamic individuals and companies want to locate, he said.
In order to achieve this, the Taoiseach said he was committed to improving the scientific and technological base of the economy.
Getting young people into higher education was a key aim of the government. "We will not rest until we have provided every child with the opportunity to develop to its full potential and be prepared for a long and fruitful career," he said.
Mr Ahern added he was also committed to developing rail and infrastructure and developing excellent communication technology.
"In the circumstances, we have no option but to stay competitive," he said. "We cannot make the world as we want it to be. We have to take it as it is. We have to get our cost and price inflation down to 2 per cent or risk losing jobs and markets. That is the challenge."
He also warned that it was time to call an end to profiteering.
"For too long, those who have enjoyed a privileged position in Irish society, shielded from the pressures of international competition, have had it too easy," he said.
"I want to send out a clear message this morning that those who are living off Irish productivity and output growth, rather than contributing to it, had better get real".