The Government is "remaining vigilant in the face of an increasingly uncertain external environment"
New figures from the Central Statistics Office (CSO) show that Ireland's GDP grew by 5.2% last year.
Meanwhile, its GNP growth was 9% - this figure excludes money moved into and out of the country by multinationals.
GDP expansion is down from the extraordinary 26% growth rate recorded in 2015 - which was inflated by firms (mainly in the aviation leasing industry) who moved their balance sheets here.
Quarterly GDP growth in the final three months of the year was 2.4% - that's down from 4% in the third quarter.
Consumption also rose by a more modest 3% last year.
Ireland's GDP growth is well above the EU average of less than 2%.
Minister for Finance Michael Noonan welcomed the figures: "Domestic demand is now the main driver of growth with private consumption up 3.0 per cent in 2016 supported by favourable labour market dynamics, continued increases in disposable income and solid consumer confidence.
These data are mirrored in strong tax receipts in the fourth quarter. Tax receipts have continued to perform strongly during the first quarter of this year and unemployment continues to fall."
He added that the Government remains aware of potential external threats to the Irish economy: "The Government is committed to remaining vigilant in the face of an increasingly uncertain external environment. Prudent management of the public finances and competitiveness-oriented policies helped create the recovery and only this approach will help ensure sustainable growth in the years to come."