It says almost all sectors will see employment growth
Employment figures here are on the rise, but the Irish tax take is dropping.
New statistics from the ESRI show a mixed picture on the economic front.
It says economic growth is set to remain solid in 2017 and 2018, with GDP growth forecast at 3.8% and 3.6% respectively.
It says domestic factors are contributing to higher growth, and the labour market is expected to grow 3.1% this year.
Unemployment is expected to average 6.1% this year and 5.4% next year.
In its analysis, the ESRI says: "The Irish economy continues to grow, driven by strong domestic demand.
"Improving household balance sheets and falling unemployment are expected to support solid consumption growth over the forecast horizon.
"The expansion in underlying investment activity, particularly construction, looks set to continue into 2017 and 2018, according to a variety of indicators."
On the labour market, it says improvements will be both regionally and by sector - with almost all sectors seeing employment growth.
It says the shrinking unemployment rate should also support moderate wage rises.
But the group cautions that Brexit continues to pose "a substantial risk" to the Irish economy.
It says a hard Brexit could have significant implications on the budget.
This comes at a time when tax revenue growth in 2017 has slowed down - as income, corporation and excise duties all took in less revenue than expected.
It says because of this, a Government deficit is looking increasingly likely in 2017.
Author Kieran McQuinn commented: "2017 has seen certain countervailing trends emerge in relation to the overall positive performance of the Irish economy.
"On the positive side, labour market data illustrates that the pace of employment creation and subsequent reduction in unemployment increased in 2017."
He told Newstalk Breakfast depending on the impact of Brexit, their estimates could be on the conservative side.
Co-author Dr Conor O'Toole added: "Less encouragingly, the state of the public finances and the performance of different taxation headings in particular have been significantly less robust in the present year.
"Apart from VAT receipts, most other tax headings either display weak growth or declines with respect to the same time last year."