The OECD is warning that a strong rise in Irish property prices may boost construction activity in the short-term - but risks a return to another property bubble.
In its latest twice-yearly economic outlook, the international think-tank says the Irish economy will grow by 5.6% this year.
It also gave a broad backing to the budget, which it believes should help get more people back into work.
"A fiscal package of €1.5bn in 2016 (0.7% of GDP) should prioritise getting more people back into work by revamping the tax and benefit system and enhancing activation policy", it says.
It also says exports will rise in line with increasing demand in its trading partners.
"Business investment should remain robust thanks to rising profitability and favourable financing conditions", it says.
"Growth will provide momentum to job creation and reduce the still high rate of unemployment".
And it adds that fiscal windfall gains from strong growth and low interest costs should be used primarily "for more rapid reduction of public debt".
Globally, the OECD says a further sharp downturn in emerging market economies and world trade has weakened global growth to around 2.9% this year.
It says this is well below the long-run average and is a source "of uncertainty for near-term prospects".
It projects a gradual strengthening of global growth in 2016 and 2017 to an annual 3.3% and 3.6% respectively. But adds that a clear pick-up in activity requires "a smooth rebalancing of activity in China and more robust investment in advanced economies".
"Emerging market challenges, weak trade and concerns about potential output suggest higher downside risks and vulnerabilities" compared with the its June outlook.
US output 'on a solid growth'
Presenting the outlook in Paris, OECD Secretary-General Angel Gurría said: "The slowdown in global trade and the continuing weakness in investment are deeply concerning".
"Robust trade and investment and stronger global growth should go hand in hand. G-20 leaders meeting in Antalya need to renew their efforts to secure strong, sustainable and balanced growth" he added.
The outlook says recovery in the Euro area is set to strengthen, helped by accommodative monetary policy, lower oil prices and an easing of the pace of budget tightening.
While US output remains "on a solid growth trajectory, propelled by household demand" - with GDP growth expected to be 2.5% next year and 2.4% in 2017.
But it says that recovery in Japan was "derailed" in 2015 by a sharp slowdown in demand from other Asian economies and sluggish consumption.
And that economic growth in China is projected to slow to 6.8% in 2015 and continue to decline gradually, reaching 6.2% by 2017.
The OECD says: "Achieving this rebalancing whilst avoiding a sharp reduction in GDP growth and containing financial stability risks, presents significant challenges".
