The Minister for Finance, Mr Charlie McCreevy TD, today welcomed the publication by the OECD of its two-yearly comprehensive survey of the Irish economy.

"This report gives an independent, objective and authoritative view on the progress and prospects of our economy," the Minister stated. "As such, it will be taken fully into account by the Government in its future policy considerations."

The Minister noted that the report was most complimentary about the progress of recent years, but that it also warned of the need to address possible bottlenecks and restraint requirements in the economy in order to ensure continued strong growth into the future.

The Organisation for Economic Co-operation and Development (OECD) is an international research organisation based in Paris whose membership consists of the industrialised western countries.

In its report, the OECD notes that the Irish economy "has notched up five straight years of stunning economic performance". Output growth has averaged over 9 per cent per year on a GDP basis in the period 1994-1998. Half of that growth has been reflected in considerable employment gains and the rest in impressive labour productivity growth.

Despite substantial increases in the labour force, thanks to Ireland's particularly favourable demographics and to an important reversal in migration flows, the unemployment rate has fallen by nearly 9 percentage points over the period.

According to the OECD, the transformation in the economy in recent years is attributable to the confluence of a series of favourable changes in the environment and other external factors as well as to prudent domestic planning and a range of policy shifts that lay the foundations for the pick-up in growth.

However, the Report notes that in the past year or two signs of excess demand and overheating have become evident. There are several bottlenecks emerging, particularly in the labour and housing markets. Public infrastructure is also in urgent need of enhancement, especially in the domains of transport and environmental services.

On future prospects, the OECD considers that the Irish economy can potentially continue to grow at superior rates. However, the continuation of such growth will, to a large extent, be determined by how quickly the well known bottlenecks are overcome and to what extent income and spending restraint occur.

It advises that it would be prudent to lay the ground work for the day when growth slows as it inevitably will. The nation no longer has many instruments of macroeconomics policy at its disposal. Product and input markets will, thus, have to function that much more flexibly to handle unexpected developments, it states.