As BBC reports: "The Irish economy shrank in the second quarter from the previous three months, surprising analysts who had been expecting growth. Gross domestic product (GDP) fell 1.2%, the Central Statistics Office said. It also revised down its measure of growth in the first quarter to 2.2% from 2.7%."

The government has been seeking to reassure investors about the economy.

Most economists had predicted a 0.5% rise in GDP.

"It's well below [the consensus forecast] and a disappointing figure clearly," said Dan McLaughlin, Bank of Ireland's chief economist.

"One could take some comfort from the fact that domestic demand is beginning to show some signs of life," he added.

"Probably people will now have to reassess their outlook for this year overall."

The Central Statistics Office said the economy had been hit by a fall in consumer spending - down 1.7% compared with the same period last year.