The economy is expected to grow by 4 per cent this year, while unemployment is to fall to 9.7 per cent.

The finding's contained in the ESRI's latest quarterly forecast - which is also estimating growth of 3.5 per cent in 2016.

It says the number of homeowners in negative equity is expected to fall to around 160 thousand by the end of this year.

Associate Research Professor with the ESRI Kieran McQuinn explains where the growth is coming from: