The European Commission has increased Ireland's growth forecast for this year.

In its autumn 2019 Economic Forecast, it predicts that Irish gross domestic product (GDP) will grow by 5.6% for 2019.

That is up from a predicted rise of 4% in its summer forecast, and the highest in the European Union for 2019.

This compares to a predicted EU average growth rate of 1.4% for this year and for 2020 and 2021.

It says GDP growth in Ireland is expected to moderate to 3.5% in 2020 and to 3.2% in 2021, on the back of increasing capacity constraints and an expected slowdown in Government expenditure.

The forecast for Ireland says: "GDP growth is set to moderate amid a weakening external environment, while underlying economic activity is expected to remain robust, driven by household consumption and investment in construction.

"Inflation is expected to remain moderate. The Government balance is projected to further improve, but risks to the fiscal outlook remain."

Overall, the European economy is now in its seventh consecutive year of growth and is forecast to continue expanding in 2020 and 2021.

Labour markets remain strong and unemployment continues to fall.

However, it says the external environment has become "much less supportive and uncertainty is running high".

"This is particularly affecting the manufacturing sector, which is also experiencing structural shifts.

"As a result, the European economy looks to be heading towards a protracted period of more subdued growth and muted inflation."

Euro area GDP is now forecast to expand by 1.1% in 2019 and by 1.2% in 2020 and 2021.

It also notes that job creation across the EU has proven to be "surprisingly resilient."

"This is partly because economic developments typically take some time to affect jobs but also because of the shift in employment towards service sectors."

Employment is at a record high and unemployment in the EU is at the lowest level since the start of the century.

Although net job creation is likely to slow, the unemployment rate in the Euro area is expected to continue falling from 7.6% this year to 7.4% in 2020 and 7.3% in 2021.

On Brexit, the commission says: "In the light of the process of the withdrawal of the UK from the EU, projections are based on a purely technical assumption of status quo in terms of trading patterns between the EU27 and the UK.

"This is for forecasting purposes only and has no bearing on the process underway in the context of Article 50."

But it warns that persisting trade tensions between the US and China and high levels of policy uncertainty - especially with respect to trade - have dampened investment, manufacturing and international trade.

"With global GDP growth set to remain weak, growth in Europe will depend on the strength of more domestically-oriented sectors."