It says that while the Irish economy will continue to recover in 2013 it will be at a much slower pace than previously thought.
Its still predicting growth of 1.3%, but that's down 0.4% on what it had previously predicted.
The Central Bank made a similar downgrade earlier this week.
As a consequence the Institute says the government will find it more difficult to meet the fiscal targets set by the EU and the IMF.
Its also backing the extension of the Croke Park deal which it says would help the government to make the savings necessary.
But the institute's economist David Duffy says the weaker growth will make it more difficult for the government to meet the fiscal targets sent by the EU and the IMF and says says economic growth this year will be slow:
