This week's forecasts from the Organisation for Economic Co-Operation and Development put Ireland's economic performance into an international context. According to the OECD's forecasters, the Irish economy has topped the international growth league this year and last and will continue to do so in 1998 and 1999.

Whatever caveats are entered about the accuracy of Gross Domestic Product growth as a measure of economic performance, it is nonetheless extraordinary to see the transformation of the economy from a chronic underperfomer to one of the best performing economies in the industrialised world.

The OECD obviously believes that the economy can continue to perform well heading into EU monetary union. In looking at the factors which might slow performance it makes a couple of important points. Like many forecasters, the OECD warns that the decline in the pound's exchange rate against most other currencies could start to push up inflation, as import prices rise. In turn this increase in prices could slow consumer spending.

The OECD is generally optimistic that there will not be pressure on wages due to general shortages of skilled labour. However, it does add that if more Irish people were to return from overseas to work here, then the expansion could be prolonged due to the resulting increase in the supply of labour.

In policy terms, the OECD warning on currency value underlines the dilemma of the Government in deciding the appropriate rate at which the pound should enter monetary union. If it chooses the pound's current central ERM rate, then a substantial further devaluation of the currency is inevitable. The OECD's comments on the importance of a continued supply of skilled employees show it is vital that Government initiatives in this area are successful.