Ireland is expected to see a "significant" tax surplus this year and next despite a sharp economic slowdown sending many countries into recession, the ESRI has forecast.

Unemployment is at a near historical low of 4.4% which will help domestic growth in the economy hit 8.4% this year.

It comes as Finance Minister Paschal Donohoe has said he expects Ireland's corporation tax rate will be increased from 12.5% to 15% in 2024.

It follows a deal brokered at EU level earlier this week, in which Hungary dropped its opposition to the minimum rate of 15% for the bloc, brokered as part of OECD efforts to introduce a global deal on tax reform last year.

Mr Donohoe said: "This will mean a change in corporate tax revenue, but this is the reason why we're running a surplus of €12bn in November of this year."

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Mr Donohoe said EU countries will implement the directive requiring the tax change throughout 2024.

The ESRI's report author Kieran McQuinn said: "The significant challenges confronting the Irish economy in 2023 means inward foreign direct investment must continue to be supported given its importance to the domestic economy."