Central Bank says economy will grow better than expected next year

It adds that the number of mortgage arrears cases is declining

Central Bank, growth, 2016, mortgage arrears, Ireland, forecast,

Christmas lights on Dublin's Grafton Street | Image: Niall Carson / PA Archive/PA Images

The Central Bank has issued an upbeat forecast for the economy.

It has upgraded its predictions for GDP growth next year from 3.7% to 4.7%.

Just six months ago, the bank said GDP growth for this year would be 3.8% - but today it says the economy will have grown by 5.8% by year end.

However, the review is warning of problems with the global economy that could have an impact here - including the slowing of economic performance in China.

"Stronger domestic demand is evident, supported by an improving labour market and rising real wages which benefit the household sector directly", the Central Bank says.

It adds that "the non-financial corporate sector is seeing strong growth in exports, while investment is forecast to rise sharply in 2015 and 2016".

"In the Euro area, output growth remains moderate and both headline and core inflation rates are subdued, reflecting, in part, lower commodity prices".

"Persistently low inflation and muted nominal growth are not supportive of debt sustainability in Euro area sovereign and corporate sectors," it says.

While in the household sector, it finds the number of mortgage arrears cases is on a downward trend - with the exception of those in very long-term arrears of over 720 days.

But it cautions: "The performance of the Chinese economy and its financial markets have been in the spotlight in recent months, with a decline in growth now appearing to be more pronounced than previously anticipated".