The Central Bank has forecast that growth in the economy will pick up in the second half of this year, if there is a successful roll-out of the Covid-19 vaccination programme.
It also warns, however, that despite the trade deal struck between the EU and the UK, barriers to trade and the movement of people will hit Ireland's economy over time.
Strong export growth in pharmaceuticals and computer services delivered GDP growth of 2.5% in the Irish economy last year, according to the Central Bank's Quarterly Bulletin.
The Bank believes there could be growth of 3.8% this year, although its outlook is still "considerably uncertain" given the persistent threat from Covid-19.