Gross Domestic Product (GDP) fell 2.3 per cent in volume terms last year while Gross National Product (GNP) declined 3.1 per cent, according to new figures from the Central Statistics Office (CSO).
GDP was 7.5 per cent lower in the fourth quarter, the biggest fall since quarterly records began in the 1990s.
GNP -which excludes profits from multinational firms based in Ireland - was 6.7 per cent lower during the quarter.
According to the statistics, consumer spending was four per cent lower in the fourth quarter of 2008 versus a year earlier.
Capital investment declined by 30.6 per cent lower over the year while net exports were €1,633 million higher in the fourth quarter compared with the same period of 2007.
Industrial output dropped at an annual rate of 12.5 per cent, with the construction sector showing a decline of 24 per cent.
Commenting on the latest Quarterly National Accounts data, Alan McQuaid, senior economist with Bloxhams Stockbokers said the figures highlight the huge task facing the Government in attempting to get the country’s public finances back in order.
"These latest National Accounts figures paint a fairly stark picture, especially as all the evidence points to a further sharp deterioration in output in the opening quarter of 2009. Last Friday’s retail sales data for January showed a record volume increase of over 20 per cent, and things weren’t much better in February if new car sales are anything to go by. As things currently stand, it is not hard to see double digit declines in real GDP over the coming quarters," he said.
"The extreme weakness of the economy at this point in time must also raise serious questions marks about the wisdom of the Government’s intention of imposing further income levies on already hard-pressed consumers and PAYE workers. All that can be said is that the outlook for economic output and employment in 2009 are fairly bleak indeed," he added.
Meanwhile, business organisation IBEC sid the 8.4 per cent fall in good exports indicates significant weakening in the performance of the traded sector.
“In the very short-term, Government must support enterprise and business in order to preserve as much employment as possible during this period of exceptional international turmoil. However, in order to be ready to reap the benefits of the global economic upturn, which may materialise as soon as 2010, Ireland must improve its competitiveness. This will require a reduction in all prices across the economy," said IBEC senior economist Fergal O’Brien.
