The Central Bank has said Covid-19 has "triggered an extremely severe economic shock", which is fundamentally different from anything the economy has been through before.
In its Quarterly Bulletin, the bank said the economy could shrink by 8.3% of GDP this year and the unemployment rate could peak at 25% in the coming months.
Over the next three months, it believes the economy here could collapse by 25%.
It has pencilled in a partial recovery later in the year but this, it said, is highly conditional and the risks to its forecasts are on the downside.
The path ahead for the economy, it said, depends on the path of the virus both here and abroad.
The Central Bank is predicting between 450,000 and 500,000 jobs will be lost, most in the next couple of months.
Some of this will be temporary but it has pencilled in unemployment to be still above 10% at the end of the year.
It is forecasting a deficit in the public finances this year of €19.6 billion, down from an expected surplus of €2.2bn.
It said the reduction in economic output this year will be greater than any year during the financial crisis.
The Central Bank also revised down its estimate of house completions for this year from 26,000 to 16,000.
Meanwhile, the Minister for Finance has said that the scale of the economic challenge Ireland faces due to the Covid-19 crisis depends on "how successful we are" in dealing with the public health emergency we face.
Paschal Donohoe said that "we can and we will build a new Irish economy" by borrowing to ensure jobs and incomes can be recovered.
Speaking on RTÉ's Morning Ireland, Minister Donohoe said that the Central Bank forecasts are "possible scenarios" but emphasised that Ireland's credit worthiness is high and "we have demonstrated our ability to bring the public finances into a very good condition".
He said that our diverse economy, our credit worthiness and the "lack of a private sector bubble that we had a decade ago" are invaluable in building a new Irish economy "once we have broken the chains on Covid-19".
Minister Donohoe said the Income Subsidy Scheme, which he described as "unprecedented", was the "first step in laying our foundation for recovery" by allowing companies remain viable by paying wages of their employees.
The scheme will ensure that up to 70% of employees wages are paid "so companies can come back to life quickly" the minister said.
He appealed to companies "who want to keep people in jobs and on payroll" to look at this scheme and pick up the phone.
Minister Donohoe said an emergency budget is not imminent and it is more likely he will present an assessment of the current financial situation to the Dáil after the new interventions are fully in place.
He said it may be the situation that the Government will have to offer further support to export companies who will struggle to access markets in large countries that are also hit by economic slowdown.
Meanwhile, the Minister for Employment Affairs and Social Protection has said income and welfare supports will continue throughout the current public health crisis until those who have lost jobs can get back to work.
Regina Doherty said the priority is that people's good health is maintained, but stressed the Government "will do whatever it takes" to reboot the economy and get the people who have joined the live register back to work as soon as possible.
Speaking on the Today with Sean O'Rourke programme, Ms Doherty said that support for business and the economy will be "huge" and some who lose jobs will not get them back.
She said these people may need re-training and re-skilling to get them into new jobs.
Ms Doherty also said that original modelling had indicated 100,000 people in "very vulnerable" businesses would lose their jobs in the current crisis.
However, she said as many as 1.4 million private sector workers' jobs were now at risk as all businesses who were shut down are now vulnerable.
The Director of Economics at the Central Bank has said despite a predicted 500,000 job losses as a result of the Covid-19 pandemic it is possible to avoid a return to austerity.
Mark Cassidy said that already there have been 320,000 job losses, but the Central Bank expects this to rise and for unemployment levels to reach 25%.
However, Mr Cassidy said that the public finances are in a good position and that by easing fiscal measures and borrowing, the Government can avoid "an austere future".
He said a higher level of debt would be more sustainable now than it was previously.
Mr Cassidy told Morning Ireland that job losses will be concentrated in tourism, hospitality, recreation, retail, construction and other areas of "social consumption".
He said that in these sectors consumption rates are almost zero now, and this would reduce annual consumption by 8%.
Sales of household goods, clothing and vehicles have been "cut sharply", he added.
Mr Cassidy said a recovery will be gradual with some lasting effects where there are permanent job losses.
He said the Central Bank forecasts that "some element of deferred consumption will resume quickly" but added that a lot depends on confidence and incomes and this will determine how slow or fast a recovery will be.
He said the final cost to the economy will depend on the impact of the slowdown, on lower tax receipts, higher unemployment, increased social welfare and the cost of high public debt.
Mr Cassidy said a longer duration of the containment phase could make outcomes worse, as will more company closures, a higher number of permanent job losses, as well as the pace of recovery in the global economy, in particular the UK and US.