The Organisation for Economic Co-operation and Development has warned that rapid rises in Irish property prices are “reminiscent of the bubble period of a decade ago” and has called on the Government to act on the issue.

“Further macro-prudential tools should be used, if necessary, to prevent investors becoming excessively exposed,” the OECD said in its annual Economic Outlook, published yesterday. The Paris-based body did not specify the interventions it would favour.

The warning was contained within a generally positive assessment of the Irish economy, which, the report noted, enjoyed the fastest growth in the OECD in 2014, at 4.8 per cent. The OECD predicts 3.5 per cent growth for Ireland this year, slowing to 3.3 per cent in 2016.

Robust

“Economic growth is projected to be robust and broadly based in 2015 and 2016,” the report stated. “Exports will continue to be strong due to increasing demand in trading partners and the depreciation of the euro. Household consumption will gather pace with employment and wages rising steadily and with low energy prices.” Unemployment in Ireland was 11.3 per cent in 2014, will decrease to 9.9 per cent this year and will fall further to 9.2 per cent in 2016, the OECD said.

The OECD also expects economic policy to “exert a smaller drag on activity” than in past years and urges the Government to use strong revenue growth and low interest rates for more rapid reductions in public debt.

Credit supply

It wants reforms to prioritise getting more people back to work and advises that structures whereby the Government is trying to support credit supply to business be “carefully evaluated”.

For the global economy, the OECD cut its growth forecasts, predicting growth of 3.1 per cent in 2015 and 3.8 per cent in 2016, down from earlier expectations of 3.6 and 3.9 per cent respectively. For Europe, however, it was more optimistic.

The euro zone had been expected to grow only 1.1 per cent in 2015, and 1.7 per cent in 2016. The OECD has now revised those figures upward to 1.4 per cent this year and 2.1 per cent next year.