The Governor of the Central Bank has said that there will be an 'extended and gradual' recovery next year after a bad 2009.
Meanwhile, in Dublin, Nobel prize winning economist Paul Krugman has predicted that the Irish recovery could take five years.
Speaking to RTE News, John Hurley said the collapse of Lehman Brothers last September has led to an 'extraordinarily difficult environment' and world economies are witnessing shocks never experienced before.
Mr Hurley said the whole of 2009 would be very difficult. He said Ireland's economic recovery would take time and be gradual, but that the benefits would begin to be seen next year.
He also said that the adjustment in house prices over the past 18 months had been inevitable and that prices have further to fall.
This followed a revision downwards yesterday in Frankfurt of the European Central Bank's forecasts for the euro area. The bank now predicts that the gross domestic product of the 16 countries that use the euro will shrink by up to 5.1% this year.
This is a much bigger drop in GDP than was previously forecast, because of a worse than expected performance in the first three months of this year, and the ECB's greater pessimism on the length of the recession.
Irish bounce could take five years - Krugman
Nobel prize winning economist Paul Krugman has predicted that the Irish recovery could take five years.
Speaking in Dublin, Professor Krugman said Ireland faced 'a very hard slog' but he said 'the adjustment is working'.
He ruled out Ireland's defaulting on debt and said it was hard to see why the cost of Irish Government borrowing had reached such high levels in recent months.
Professor Krugman said it was clear the Government had been 'cheering on the bubble' but he also pointed out that it was asking too much to ask governments to fight bubbles.
Speaking in the National Gallery at an event hosted by Merrion Capital, Professor Krugman said the Irish Government should nationalise 'weak' banks and leave others on their own.
