The worst of the much publicised decline in the construction sector and the dreaded economic slowdown may be over, according to new figures published yesterday.

In the economic report, NCB Stockbrokers predicted the economy would grow by 2.5% this year, and re-bound to 4.5% in 2009.

Eunan King, NCB Chief Economist said too much emphasis has been placed on the effects of the decline in house building activity and house price slump.

Mr King said: "The construction sector did not lead the economic boom in the early 1990s, and housing has not been the dynamic factor for the past two years. Therefore, the Irish economy will not experience a serious setback on account of the current re-balancing of the property market."

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He said recent reporting of an impending economic crash "misses the point about the overall health of the Irish economy," adding that the group expect solid growth in consumption, exports and business investment.

He argued that while the construction sector lost about 20,000 jobs last year overall employment still grew. And while the adjustment to a slower rate of house construction was bound to be difficult, he claimed most of it may have already taken place.

"We may have seen most of the job losses in construction already," he said.

The economy would only suffer a serious setback from a steep rise in interest rates, or taxes, or an outside shock which spiked unemployment, which he claimed there was no sign off.

(VB/JM)