The median forecast for gross domestic product growth for 2011 from 10 economists surveyed by Reuters rose to 1.4 percent, from 0.5 percent forecast a month ago, after second-quarter growth came in at 1.6 percent.

The prospect of a global slowdown hitting Ireland’s buoyant exports prompted a cut in the median forecasts for 2012 and 2013 by 0.25 percentage points to 1.65 and 2.45 percent respectively.

“Although there are still clear downside risks, we remain hopeful that after three successive years of contraction the Irish economy will return to positive GDP growth in 2011 followed by a stronger performance over the next couple of years,” said Alan McQuaid, chief economist at Bloxham Stockbrokers in Dublin.

“The signs are that the country is heading in the right direction.”

The forecasts show Ireland continuing to do better than the other euro zone members bailed out in the sovereign debt crisis — Greece and Portugal both expect their economies to contract next year — although the lower growth will put more pressure on the government’s existing plans.

“Lower growth forecasts for 2012 mean that the government will have to find more than (the already announced) 3.6 billion euros in adjustments to keep the public finances on track , ” said Oliver Mangan, chief bond economist at AIB global treasury.

“Fortunately, debt interest costs will be lower as a result of changes to bail-out terms so further adjustments to taxes and spending may not be required.”

The government says it expects to save around 1.2 billion euros per year from proposed changes to the interest rate on its bailout by European authorities.

The key challenge for Irish ministers is to boost domestic demand as exports are unlikely to be enough to secure solid growth in the medium term.

The economists polled remained bearish on the domestic economy, increasing their forecast of contraction in retail sales in 2011 to 1.9 percent from 1.7.

They also increased their median forecast for house price falls for each of the next three years as the government rolls out austerity measures under its IMF/EU bailout.

GDP was forecast to grow 1.5 percent in the third quarter year-on-year, but slip 0.5 percent compared to the previous quarter as exports falter.

The concessions on the bailout terms, however, have prompted economists to cut their forecasts for growth in the government’s debt pile.

The median estimate of general government debt fell by between one and two percentage points for each of the next five years with the peak falling from 116 percent to 115 percent at the end of 2013.

Combined with positive reviews from the EU/IMF of the bailout program, the concessions have helped reduce Ireland’s cost of borrowing from 14 percent in mid-July to under 8 percent.

“Ireland has gone quietly about its business in recent months and has been rewarded by the markets,” said Dermot O’Leary, chief economist at Goodbody Stockbrokers.

“It is events outside of Ireland’s control, such as the extent of the international slowdown and European efforts to solve the debt crisis, that are now vitally important.”