Unemployment will fall to just under 8% by the end of 2016
The Economic and Social Research Institute (ESRI) says the economy will grow by 6.7% this year.
It is predicting further growth of almost 5% in 2016.
Its latest forecast says unemployment will fall to 9% by the end of the year and to just under 8% by the end of 2016.
But it is warning that issues in the housing market and a potential significant downturn in global trade next year pose a risk.
Economist with the ESRI, David Duffy, says both Ireland's domestic and international trade is on the rise.
"What we are seeing at the moment is that not only is the external side of the economy, not only are we trading more, but we are also seeing the domestic side of the economic grow", he said.
"We are seeing consumption growth and increases in investment and all those are contributing to an economy that is growing quite strongly in 2015 and we think, that on the basis of trends, that that growth will continue into 2016".
"Part of the growth in consumption reflects that fact that we're seeing employment growth across most sectors in the economy - and on that basis we think unemployment and the unemployment rate will decline" he said.
"The headline rate will fall to about an average of just under 8% - 7.9% - during 2016".
"But that's an annual average, so it could well be down at around 7.5% by the final quarter of 2016" he added.
He told Newstalk Breakfast housing supply remains an issue, but we have options.