The Central Bank has forecast that the Irish economy will grow this year at its lowest pace since 1992.
The bank expects about 24,000 job losses in the construction sector, however, it believes that the economy will improve again in 2009.
In its latest quarterly economic bulletin, it also warns that the impact of a slowdown in the US economy on other countries could be significant.
It cites the continuing turmoil on financial markets, volatility in oil prices and the weak dollar as other factors which are contributing to the uncertainty.
The bank says Irish growth remains strong by international standards, and adds that slower growth will reduce inflationary pressures.
It also says that the slowdown in house building has had less impact on employment and overall construction output than might have been expected, most likely because of strong spending on infrastructure and home improvement.
Speaking on RTÉ Radio's News At One, Friends First Chief Economist Jim Power said the Government needed to do more to help the economy and the business environment.
He said there needed to be improvements, including in infrastructure, IT, education and labour skills.
