The Central Bank's second edition of the 2016 Macro Financial Review highlights the threat that Brexit poses to the Irish economy as the year draws to a close.

"The Review shows a less positive outlook for the non-financial corporate sector compared with the (previous) Review published last June, with Brexit posing a substantial downside risk. Despite an increase in new lending, the overall stock of non-financial corporate sector credit continues to decline," the Central Bank states.

The bank expects the economy to grow by 4.5% next year and by 3.6% in 2017.

The report highlights the main threats that the economy faces:

"The balance of risks to the Irish economy is tilted to the downside owing to its vulnerability to domestic and external shocks, high public and private debt, and Brexit."

Meanwhile, it says it is "too soon after the UK referendum to be able to assess all Brexit-related effects on the macro-financial environment in Ireland."

It adds that despite deleveraging household debt remains high and that "returns on Irish commercial property continued to decline in the first half of 2016, but remain higher than those in other countries."

Speaking at the launch of the report, Deputy Governor of the Central Bank, Sharon Donnery said, "The immediate impact of Brexit on the euro area has been relatively muted. Nevertheless, the considerable uncertainty on the outcome of the negotiations between the UK and the EU constitutes a large downside risk to the euro area economy."

"The threat of simultaneous corrections across asset classes persists, given compressed global risk premia in financial markets and macroeconomic uncertainty," she continued.