The fact that many observers were disappointed with yesterday's data showing the economy growing by 9.5 per cent last year shows just how far the State has progressed.

The figures prove the economy is still the fastest growing in Europe - activity in 1997 was even greater than in 1996.

And while it is clear the economy cannot continue to expand at this pace which would see it doubling in size every 12 years, the signs for this year are good.

According to Mr Oliver Mangan, economist at AIB, 1997's activity levels have been maintained in the early part of 1998. And Dr Dan McLaughlin of ABN Amro says that exceptionally strong export growth may mean that the economy will expand even more rapidly this year with a growth rate of 12.5 per cent.

The buoyant growth is consistent with strong job creation levels and a jump in wages. An average increase of around 5 per cent, recorded in yesterday's figures, is double what was agreed in Partnership 2000. But the Central Statistics Office (CSO) does not give any indications of what is in store for inflation.

One reason that activity fell back in 1996 after a bumper 1995 was an interest rate hike and a slowdown in the numbers of multinational firms locating here. In 1998 neither factor is likely to feature. In the run-up to the single currency, interest rate cuts are likely and, so far, it has been a record year for IDA Ireland in attracting large-scale projects here.

On top of that, according to Mr Mangan, retail sales are already up by 2 per cent from last year and car sales remain buoyant, running at 14 per cent in the year to May.

Tax receipts are also strong, rising by 11.6 per cent in the first five months of the year and credit growth shows no signs of slowing down - rising by 24.3 per cent at the end of April after a 23.6 per cent rise last year.

It is also likely the CSO will revise the 1997 growth figure upward, perhaps as early as October when a new measure of GNP has to be presented to the EU to calculate our budget contribution to Europe. One of the reasons for the likely upward revision, according to Dr McLaughlin, is that the consumer spending figure of 6.3 per cent contained in the existing calculations looks very low.