Preliminary figures from the Central Statistics Office show that the economy shrank at a record rate last year.

The CSO said gross domestic product fell by 7.1% from 2008, while gross national product plunged by 11.3%.

As GDP includes profits made by US multi-nationals based here, many economists prefer to focus on gross national product (GNP).

Figures for the final quarter of last year showed no sign of a let-up in the economy's decline, with output for both GDP and GNP down 2.3% from the third quarter.

In Q4, there were annual falls of 5.1% in GDP and 10.4% in GNP. Consumer spending in Q4 was 5.2% lower than a year earlier, a slightly smaller fall than in the three previous quarters.

But capital investment dropped by more than 28% from a year earlier and industrial output was down 6%. Construction output fell by 32.3%.

Finance Minister Brian Lenihan said the GDP decline of 7.1% was 'marginally better' than the Government's Budget day estimate of 7.5%.

In a statement, the Minister said that GDP was 'roughly unchanged' in the fourth quarter from Q3 when the impact of the collapse in house building was excluded.

'Today's figures are consistent with my Budget day projections for this year and as I outlined, I expect that the economy will resume growing in the second half of the year,' he said.

But Bloxham economist Alan McQuaid said the figures continued to paint a bleak picture of the economy. He pointed out that an original quarterly increase of 0.3% in GDP in the third quarter of last year - which technically implied that Ireland came out of recession - had now been revised back down to a contraction of 0.1%.

'The seasonally-adjusted decline in the fourth quarter picked up sharply to 2.3%, suggesting that not only did Ireland not come out of recession in Q3 2009, but it actually went into a deeper downturn in the final quarter,' the economist said.

NCB economist Brian Devine said flooding may have played a part in the re-acceleration of the decline in the economy.

Davy economist Rossa White said investment had collapsed to a ten-year low, and this trend was likely to worsen, but consumer spending was stabilising. He also said exports were stabilising, and grew by 0.1% in volume compared with the third quarter of 2009.

Balance of payments deficit at 5-year low

Separate CSO figures show that the deficit on the current account of the balance of payments last year was just over €4.8 billion - the lowest figure for five years. The balance of payments measures flows of income into and out of the economy.

The main factor in the fall was an €8.8 billion rise in the merchandise surplus, as a collapse in imports far outweighed the drop in exports.

For the final quarter of 2009, the current account deficit was just €166m, though exports of goods fell slightly from Q3 and imports rose slightly. But the Q4 figures were boosted by an increase in exports of services such as computer and business services.