Economic prospects have deteriorated rapidly since the summer and, more than a month after the terrorist attacks in the US, there is uncertainty about the global economy.

What is certain is that the Irish economy will grow more slowly this year than last and almost certainly slower again next year. However, it is possible that the Irish economy will grow more quickly than other OECD countries, a scenario that the Paris-based organisation is forecasting.

Some politicians and business leaders have warned that we are in danger of talking ourselves into a recession but, according to UCD economics professor Brendan Walsh, there is little danger of this.

He argues that discussion in the Republic about whether the economy is heading for recession will not influence Intel or other multinationals when deciding whether to expand or contract operations here, and consumer confidence will be affected far more by wage packets and job prospects than by discussion.

The Minister for Finance, Mr McCreevy, agrees.

He says that if US Federal Reserve chairman Mr Alan Greenspan cannot predict the US economy's prospects with any confidence, neither can anyone in the Republic.

However, Friends First investment director Mr Jim Power says a significant slowdown is on the way and to ignore it would be naive. The economy had been hit by two shocks early in the year - foot-and-mouth and the US tech slowdown, he says. This was accentuated by September 11th, which will hit tourism and the export sector particularly hard.

This does not mean that there is no basis for recovery. But it could mean waiting until late 2002 or 2003 for signs of recovery.

This type of analysis is also in line with the Economic and Social Research Institute's (ESRI) recently published medium-term review. Mr Danny McCoy of the ESRI believes the economy may technically be in recession at the end of this year. That would constitute two consecutive quarters of negative growth.

The problem is that the Central Statistics Office does not publish seasonally adjusted quarterly growth figures and so it will be impossible to know for certain.

Mr McCoy says to attain average growth in 2002 of 5 per cent will require an extraordinary upturn at the end of the year. He predicts growth will average 3 per cent next year. The danger, he says, is the Government could overreact to short-term difficulties and cut taxes or boost spending excessively. "That would do the real damage," he says.

The sectors that have been badly hit are tourism, technology and exports. According to Prof Walsh, vital foreign direct investment will also be hit.

According to IDA spokesman Mr Colm Donlon, the economy may end up with the same numbers employed in the multinational sector at the end of this year as last. However, he was unable to say how many people had lost or gained jobs so far this year, but said the biotechnology sector in particular is still recruiting, while the high-tech sector has lost 6,500 jobs to date this year.

Unemployment figures and tax revenue are among the most timely indicators on the Irish economy. So far there have been few signs of any increase in the numbers unemployed, although tax receipts have fallen dramatically.

According to Enterprise Ireland, there have been 1,939 job losses in the indigenous firms it supports, with 571 of these in the high-tech sector. However, 3,065 jobs were created, 1,700 of which were in the high-tech sector.

An Enterprise Ireland spokesman says that many of those in the high-tech sector were re-employed quickly. When weighing scales firm Hanson closed, five companies visited looking to recruit staff. However, things are not so easy for those losing jobs in traditional sectors such as clothing and footwear.

F┴S has put specialised training in place for many of these people.

IDA Ireland says many of the job cuts announced so far will not happen until December. "The post-September 11th impact will not be in this year's report." He added that most Gateway employees were re-employed, as were those from General SemiConductors.

Prof Walsh warns that the low unemployment figures will increase. "At the beginning of a recession, companies are unsure how long it will last so they hold onto staff, many of whom they found it hard to recruit. If the slowdown were only temporary they fear it would be foolish to let staff go. However, if it proves to be of longer duration, they will let people go."

According to Prof Walsh, it is remarkable how resilient the economy and jobs have been so far. There were substantial job losses at Gateway and Aer Lingus but nowhere near the level seen in the US.

Others such as IIB's Mr Austin Hughes argue that there are many reasons to be optimistic. He says interest rate cuts will boost activity and possibly boost spending by as much as £500 million (€635 million).

In addition, he argues that oil price reductions will be worth about £300 million in 2002 if they stay low.

Budget policy will also help, with pay increases still coming through and capacity available to implement the National Development Plan.