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LONDON (ShareCast) - Ireland's economy shrank at an unprecedented pace in the first three months of 2009, as capital spending collapsed and consumer spending tumbled.

Gross domestic product fell 8.5% from a year earlier compared with an 8% decline in the last three months of 2008, the Central Statistics Office said.

Gross National Product, seen as a more accurate measure because it excludes giant multinational companies based in Ireland, fell by 12% from a year ago. GNP had been expected to fall 9.8% in the first three months of the year. Ireland also revised down its estimate for 2008 GDP to -3% from a preliminary -2.3%.

Last week, the IMF forecast Ireland's economy will shrink by a 13.5% in total over the three years to 2010.

Unemployment in the Republic is already running at 13-year highs, with the government raising taxes and cutting spending to keep the spiralling fiscal deficit under control and to prop up a beleaguered banking sector.

The Irish government has already injected €7bn of public money into Bank of Ireland (Dublin: BIR.IR - news) and Allied Irish Bank, which could face losses of as much as €35bn by 2010, according to the IMF.

Capital spending tumbled 34% compared with this time last year, while consumer spending dropped 9.1%. Exports fell 3% and imports declined 11.7% in the first quarter.