Ireland has had the fastest growing economy in the European Union for the past three years and the bank sees gross domestic product growing by 3.3 percent this year, down from a forecast of 3.6 percent three months ago, and then by 3 percent in 2018.
Pointing to a softening in consumer sentiment and tax data, it said there were some signs of an easing in consumer spending in the second half of 2016, though the extent was relatively modest with labour market conditions continuing to improve.
The outlook for exports is subject to considerable uncertainty, the bank said, including from the potential effects stemming from near neighbour and key trading partner Britain's decision to leave the European Union.
The central bank said last year that in its most pessimistic scenario, where increased tariff and non-tariff barriers significantly reduce trade flows between Ireland and the United Kingdom, Irish GDP could be 3.2 percent lower over a period of 10 years.
"Looking ahead, while the prospects for sustained, solid growth remain positive, external factors, particularly uncertainties in relation to Brexit, pose risks to the outlook," the central bank said.
"External uncertainties are heightening and, given the highly open nature of the Irish economy, risks to the forecasts are firmly weighted to the downside."
(Reporting by Padraic Halpin; Editing by Gareth Jones)
