The OECD has said the economy here will continue its strong expansion over the next two years.

The Paris-based Organisation for Economic Co-operation and Development revised this year's Irish GDP growth figure upwards from the 5% it predicted in September, to 5.6%.

In its bi-annual economic outlook, the OECD also raised its forecast for 2016 up from 4% to 4.1% and predicted growth of 3.48% for 2017.

The think-tank said that Irish exports will rise in line with increasing demand in its trading partners.

It said that business investment should remain robust thanks to rising profitability and favourable financing conditions.

The economic growth will provide momentum to job creation and reduce the still high rate of unemployment, "thereby spreading the fruits of the recovery more widely"," it added.

The organisation said that Irish fiscal policy is expected to exert a smaller drag on activity than in past years, while the Government remains on track towards its medium-term goal of balancing the budget.

It also said that fiscal windfall gains from strong economic growth and low interest costs should be used mainly for more rapid reduction of public debt.

But the OECD also said that global trade flows have fallen dangerously close to levels usually associated with a global recession, although actions taken by China and others should ensure a pick-up in 2016.

It cut its 2015 growth forecast to 2.9% in its economic outlook from the 3% it forecast in September. The OECD has repeatedly cut its 2015 growth outlook from the 3.7% it initially forecast last November.

It said the US Federal Reserve should nevertheless go ahead with its first rate hike since the financial crisis as a recovery gains steam in the US and Europe, despite a slowdown mostly centred on emerging markets and China.

The organisation said global trade would grow by only 2% this year,a level it has fallen to only five times in the past five decades and that coincided with downturns - 1975, 1982-83, 2001 and 2009.

"This is deeply concerning," OECD Chief Economist Catherine Mann said in the introduction to the report. "World trade has been a bellwether for global output, " she added.

The organisation said it expected global output growth to pick up to 3.3% next year helped by stimulus measures in China, albeit less than the 3.6% it expected previously, before accelerating to 3.6% in 2017.

"Policy actions are already being implemented that will help to address the weak underlying trends. For example, China has announced a range of stimulus measures including lowering bank lending rates and expanding infrastructure investment," Mann said.

OECD trims US and euro zone growth forecasts

The OECD today trimmed its forecast for the euro zone to 1.5% this year and 1.8% next year, from 1.6% and 1.9% previously. It trimmed its 2016 forecast for Germany and France but raised Italy's.

Meanwhile, growth in the US should reach 2.4% this year and 2.5% next year, it said, cutting its 2016 outlook from a previous 2.6%. It has pencilled in 2.4% growth in 2017.

"Rate normalisation should therefore proceed cautiously ,while remaining mindful of the risks of waiting too long," the OECD said.

It added that it assumed the Fed would lift rates in December and then increase them gradually.

The OECD, which had called for a September "lift-off" only to see the Fed hold rates steady, said the delay had caused large cross-border capital flows and volatility, making life difficult for emerging market policymakers. And although the US has seen robust growth and falling unemployment, workers' pay has yet to pick up there.

"Without wage growth, the recovery will lose steam, and prospects for the US to support the rebound in global trade and growth will come into question," Mann said.

For China, the OECD raised its 2015 forecast to 6.8% from 6.7% and kept its 2016 forecast at 6.5%. It said it expects Chinese growth to slow to 6.2% in 2017.