Ireland has officially fallen into recession, new figures revealed today.
According to the Central Statistics Office, the country's once-aggressive economy contracted by 1 per cent in the first six months of the year.
Dubbed the Celtic Tiger during massive growth in the late 1990s, the Irish business sector is now facing its most difficult period since high unemployment and emigration hit the 1980s.
The Department of Finance pointed to the crumbling property market and the international credit crunch for the alarming figures.
A Government spokesman said: "As expected, lower levels of new house building had a major restraining influence on growth in the second quarter, as is evident from the very weak investment figures.
"Other factors at work include higher commodity prices, global financial market problems, weak demand in our major trading partners and adverse exchange rate movements."
The figures support predictions from some of the country's leading financial experts, including those at the state's influential think-tank the Economic and Social Research Institute (ESRI).
It warned earlier this year that Ireland was facing its first recession since 1983, unemployment would rise and 20,000 people would emigrate.
Compounding these problems, the Government is facing a massive budget deficit of between €5bn and €7.5bn (£3.95bn and £5.9bn) - which may take several years to recover - as the tax take dramatically fell this year.
The Budget, traditionally held in December, was moved forward six weeks by Taoiseach Brian Cowen in an attempt to reduce the knock-on effects of the now shrinking economy.