The Economic and Social Research Institute has forecast that the economy will grow by 6.7% this year and close to 5% next year, with employment breaking through the two-million mark.

However, it said the Government may have to think about running a budget surplus sooner than expected to prevent the economy from overheating.

Such growth would bring more jobs and should see the unemployment rate fall below 8%.

The budget deficit could also fall as low as 0.5% of GDP, meaning the Government would have to borrow little more than €1bn next year, leaving it close to eliminating the headline deficit.

But the ESRI has repeated its earlier view that an economy growing at such a rate does not need any stimulus in the form of tax cuts or big spending rises.

It says the next government may have to move to a budget surplus a year or two earlier than planned, spending less than it takes in, in order to take some of the heat out of the economy.

Speaking on RTÉ’s Morning Ireland, Dr Kieran McQuinn, Associate Research Professor with the Institute said a number of risks remain, with international markets needing to be considered as well as the impact of a possible Brexit.

"One of the ones that we would be focusing on is the international situation. So what has greatly assisted the Irish recovery over the last three or four years has been the very good circumstances that our main trading partners have experienced.

“The US and the UK in particular have had strong growth rates. And obviously our expectation is that both of those economies will grow over the next 12 months, but more I suppose in a broader global sense you have very obvious indicators that global trade, the outlook is not so good."

In relation to a Brexit, Mr McQuinn said the uncertainty of what might happen should the UK leave the EU, may cause some short term risks.

He added that in the long term there would be concern surrounding the negative impact it might have on trade and the labour market.