Weak international growth was the main reason given by Bank officials, who also warned that Irish inflation was a continuing source of concern.
Michael Casey, assistant director, said that the economy was still resilient even if growth rates were slipping.
He and his colleagues expect growth to rise to around 5 percent a year again.
“There is no reason why we will not get back to our long-term potential of 4 to 5 per cent in due course,” Casey said.
The November budget, in which Ireland’s finance minister, Charlie McGreevy, issued severe spending cuts, was also a factor in the bank’s predictions.
Any acceleration in the U.S. economy would be clearly good news, said Casey.
The Bank remains very concerned about inflation, which it estimates will run at around 4.5 per cent next year, still almost double the euro-zone average.
“We have had a poor inflation performance since 1999 and there is no sign that things are getting better. We must now talk about restoring competitiveness rather than trying to maintain it. The increase in costs has been well ahead for a long number of years. It has become a stark story,” Casey said.