Ireland's economy as measured by Gross Domestic Product (GDP) shrank in the first three months of the year, according to new data from the Central Statistics Office.

GDP fell by 4.6% between January and the end of March the CSO said, driven by a contraction in the multinational dominated industry sector.

The CSO has also revised down its previous data on the performance of GDP during the last three months of last year, which brought it very slightly into negative territory.

The new estimate is that GDP contracted by -0.1% in the final quarter, compared to the original estimate of growth of 0.3%.

It means that there have now been two consecutive quarters of contractions in the Irish economy as measured by GDP, meeting the definition of a technical recession.

However, statisticians at the CSO have cautioned that the dip in performance recorded in the revised figures for October to December last year was very marginal and could be revised again in a month's time.

The fall in GDP between January and March compares to a preliminary estimate published by the CSO in late April which estimated it had dipped by just 2.7%.

The data released today shows that despite the reduction in GDP in the first quarter of this year, the domestic economy as measured by Modified Domestic Demand actually grew by 2.7%.

Personal spending on goods and services, which is a key measure of economic activity, increased by 1.7% over the three months.

The drop in performance was driven in the main by an 18.2% contraction in globalised industry excluding construction, compared to the final quarter of last year.

In the domestic economy, construction grew by 12% while the agriculture, forestry and fishing sector expanded by 15.9% compared with the previous quarter.

Finance and insurance also grew by 8.3%.

But there was a decrease in the arts and entertainment sector of 15.3% and in the professional, administrative and support sector of 0.2%.

Gross National Product (GNP), which measures economic activity excluding the profits of multinationals, declined 8% in the first three months of the year.

Commenting on today's CSO figures, the Minister for Finance said the 4.6% fall in GDP reflects a fall in exports and, specifically, the globalised activities of the multinational sector.

"Multinational production can be extremely volatile on a quarterly basis with large swings a pattern of recent years. Indeed, given the outsized role the multinational sector plays in our economy, GDP is clearly not a useful measure of the living standards of domestic residents," he added.

The Minister said welcomed the strong increase in modified domestic demand (MDD) - the preferred metric of domestic economic activity – in the first quarter of the year.

He noted that the 2.7% quarterly expansion was broad-based, with both consumer and investment spending robust in the quarter.

"Consumer spending increased by 1.7% when compared with the previous quarter, with Government supports, the easing of energy prices and an improvement in confidence all playing a role. Strong employment growth in the first quarter was also a key factor," Mr McGrath said.

The Minister said that incoming data suggest that momentum has continued into the second quarter, bolstered by a record low unemployment rate of 3.8% registered in May. Consumer confidence continues to improve and inflation is on a firm downward trajectory, he added.

"Our economy is now clearly at full employment and it is important that budgetary policy is calibrated so as to avoid adding to inflation. We need to address capacity constraints, including those in the housing market, and these issues will be the focus of discussions at the forthcoming National Economic Dialogue," he added.

Central Bank Governor, Gabriel Makhlouf, said the data released today is another clear example of the dual nature of the Irish economy, with some volatility in headline GDP driven by developments in multi-nationals activity both within and outside the State.

"The modified domestic demand numbers along with other economic data we have seen in the last few weeks, including with unemployment at historic lows, job vacancy rates remaining relatively high and growth in the domestic economy remaining relatively robust but with obvious constraints across various sectors, points to the economy at operating at capacity," he said.