Davy Stockbrokers has trimmed its growth forecast for the economy this year to 3.4 from an earlier 3.8 per cent, although the stockbroker remains upbeat about unemployment rates and the housing market.
In its latest economic forecast, the firm also predicts that growth will slow to 2.6 per cent in 2005 as the pace of growth slows in the global economy.
It says the higher than estimated accumulation of stocks in the economy last year is the chief reason for the 2004 downgrade.
In its report, the stockbroker claims there was a "very rapid build-up in stocks" in the final months of 2003, and says this implies less production in 2004.
Despite the lowered growth expectations, the firm stresses the economy is healthy enough compared to our European neighbours and says projected GNP growth of 3.4 per cent this year, while little changed from last year's 3.3 per cent , will "feel" significantly better.
This, it says, is because consumer spending, investment and exports are all growing at the same time.
The report predicts the housing market will continue to grow strongly in the early months of the year and the firm has lifted its forecast for house completions to 69,000, the same as 2003.
Unemployment is expected to reach to 5 per cent compared to an earlier forecast of 6 per cent after stronger than expected employment figures from the CSO in the last month.
Davy's also predicts that the single currency will soften from its current level of $1.20 to $1.10 by the end of this year and attributes the projected fall to likely policy changes after November's US presidential election.