Investec has cut its Irish economic forecasts, saying 2016 will likely prove a "year of two halves" as high activity in the first six months gives over to post-Brexit vote weakness.

Philip O’Sullivan, an economist with the investment firm in Dublin, said he has cut his 2016 gross domestic product growth forecast to 4.8 per cent from 5 per cent, while his 2017 estimate falls to 3.5 per cent from 4 per cent.

“These cuts reflect greater caution about the prospects for export and investment growth in a post-Brexit world, which is partly offset by a stronger consumer profile as labour market data continue to impress,” Mr O’Sullivan said in a note.

Investec said economic indicators signal Ireland had a strong economic performance in the first six months of the year, particularly on the domestic side as retail sales soared.

“Towards the end of the half there were signs of emerging softness,” he said, noting that the manufacturing purchasing managers index fell to its lowest since July 2013 in May, while in April the services PMI softened to its weakest outturn since February 2014, although both remain comfortably above the 50 ‘no change’ line separating growth from contraction.

"Post the UK's EU referendum, we fear that further weakening is inevitable," Mr O'Sullivan said. "Notwithstanding this moderation, and barring any more statistical anomalies, the Irish economy is still likely to turn in some of the strongest growth in the European Union in both this year and the next."