Figures from the Central Statistics Office show that the Irish economy shrank for the third year in a row in 2010, with gross domestic product falling by 1%.

As GDP includes profits made by US multi-nationals based here, many economists prefer to focus on gross national product (GNP), which showed a bigger drop of 2.1% last year. GDP and GNP fell by 7.6% and 10.7% respectively in 2009.

The CSO said there was a growth in net exports of 24.5%, but this was not strong enough to offset falls in other areas of the economy, but this was not strong enough to offset falls in other areas of the economy.

Imports also rose, while there were drops of 1.2% in consumer spending and 2.2% in Government spending.

Industry - excluding building and construction - grew strongly last year, with output increasing by 13.2%. But building and construction output dropped by 31.8%, a similar fall to the previous year.

The CSO said there was an increase in multi-national profits flowing out of the country, while interest payments on Government debt also rose. These factors meant the fall in GNP was bigger last year.

For the final quarter of 2010, GDP fell by 2.7% compared with the same period in 2009, but GNP rose 2.8%. Compared with the third quarter of 2010, GDP fell 1.6% and GNP rose 2%. The CSO said this was because there was a deline in multi-nationals' exports, which led to lower profits at these companies.

A note from NCB economist Brian Devine pointed out that the value of the country's total economic output, as measured by GDP, was €154 billion. Mr Devine said this was €3.3 billion less than expected in Budget 2011 and had implications for the tax take and the percentage measurement of the budget deficit.

He said pushed NCB's estimate of the deficit to GDP ratio for 2014 to 5.5% of GDP in 2014, with a debt/GDP ratio in 2014 of 117.8%. This is based on an assumption that another €22.5 billion is injected into the banking system.

Separate CSO figures show that the balance of payments current account deficit last year was just over €1.1 billion, the lowest deficit since 2004. There was a surplus of almost €1.4 billion in the final three months of the year.

The balance of payments measures flows of income into and out of the economy. The merchandise surplus of more than €37 billion last year was boosted by increased exports, despite a slight fall-off later in the year.