The economy will grow 5.7 percent this year and 5 percent in 2006, the Dublin-based Economic and Social Research Institute said today. That compares with a July forecasts of 6 percent and 5.1 percent. The economy expanded 4.5 percent in 2004.

In the U.K., Ireland's second-biggest export market after the U.S., the economy expanded at the slowest annual pace in more than 12 years in the second quarter. The European Central Bank yesterday kept interest rates at a six-decade low for a 28th month to foster growth in the 12-nation euro region.

Germany's Sept. 18 election failed to produce a decisive majority, and Chancellor Gerhard Schroeder and opposition leader Angela Merkel are trying to agree on a coalition government.

The economy, spurred by consumer spending, still is the fastest growing in the euro region. Consumer spending will increase 5.5 percent this year and 5.8 percent in 2006 after growing 3.8 percent in 2004, according to the institute.

Unemployment will drop to 4.2 percent this year and next from 4.4 percent last year, the institute forecast. Axa Assistance, a unit of Axa SA, Europe's second-biggest insurer by premiums, said on Sept. 21 it will hire 300 workers at a customer support center in Ireland over the next five years.

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