The economy shrank by 8.5 per cent in the first three months of 2009, according to new figures released today.
Falls in consumer spending and capital investment resulted in the 8.5 per cent fall in gross domestic product (GDP), compared with the same period in 2008.
The last time the economy suffered such dramatic losses was in 1982-83 and 1956-58.
According to the Central Statistics Office (CSO) quarterly national accounts GDP growth fell by 1.5 per cent between the last quarter of 2008 and the first quarter this year.
In the first quarter, gross national product – which includes the contribution from foreign-owned firms operating here – fell 12 per cent compared with the same three month period in 2008.
Consumer spending was down 9.1 per cent over the year while capital investment declined 34.1 per cent over the period.
Net exports were €2.8 billion higher in the first quarter year-on-year as the decline in imports over the period was steeper than the decline in exports.
Industry output volumes fell 10.5 per cent in the first quarter while output by the construction sector was down 31.4 per cent.
Capital investment in the first quarter dropped 34.1 per cent year-on-year.
Minister for Finance Brian Lenihan forecast in the Budget that the economy would shrink by 7.75 per cent for the whole of 2009.
"We already knew that conditions had deteriorated significantly in the first quarter," a spokesman for the minister said.
"Moreover, there are some indications that the rate of deterioration may have slowed in the second quarter of this year."
But Fine Gael's Richard Bruton dismissed the optimistic outlook.
"There is no sign of the long-awaited green shorts of recovery," he said.
"There is plenty of evidence of the serious failure of Fianna Fail policy in recent years, and how the recession was largely driven by Government mistakes."
NCB Stockbrokers said the economy was now back to levels of GNP and GDP seen in 2005 and 2006.
"There is little in the Q1 GDP figures which alters our short term view on the domestic part of the Irish economy – consumption weighed down by taxes, wage cuts, employment declines; investment weighed down by oversupply in the residential and construction markets, and business and equipment investment weighed down by uncertainty; government spending being curtailed to keep the budget deficit under control," the broker said in a statement.
"One thing that we had underestimated was the resilience of the multinational exporting sector, as a result both exports and imports figures need to be revised up. But since both figures are to be revised up there will be little effect on the contribution of net export and hence there will be little change to our GDP forecasts with the economy expected to contract by 8.3 per cent and 3.4 per cent in 2009 and 2010."
Additional reporting: Reuters