The economy, as measured by GDP, increased by 3.4% in  2020, according to preliminary figures from the Central Statistics Office today. 

Ireland was the only economy in Europe to have grown last year on a GDP basis. 

But when domestic activity is measured, the country's modified domestic demand fell by 5.4% – a fall which was in the mid range of European economies. 

The country's GNP – a measure of economic activity that excludes the profits of multinationals – showed an increase of 0.6% in 2020 over 2019, the CSO added.

Today's figures show that the large and relatively pandemic-proof multinational sector masked the impact of very tough lockdown regimes, which left one in four people temporarily or permanently out of work. 

GDP rose by 1.5% year-on-year in the fourth quarter, driven by a brief reopening of the economy in December.

It was down 5.1% quarter-on-quarter compared to the three months to September, when businesses were largely out of lockdown. 

Today's figures showed that sectors focused on the domestic market experienced significantly lower levels of economic activity in 2020, with the Distribution, Transport, Hotels & Restaurants sector contracting by 16.7%.

Construction decreased by 12.7% while the Arts & Entertainment sector sank by 54.4%. 

But growth continued in the more globalised sectors with Industry increasing by 15.2% while the Information & Communication sector increased by 14.3% in the year.  

Commenting on today's figures, Minster for Finance Paschal Donohoe said that GDP growth of 3.4% for 2020 as a whole is "remarkable" both in an international context and compared with expectations this time last year as the coronavirus pandemic started.

The Minister said it was entirely a result of the growth in exports, which rose by 6.25% despite a sharp decline in world demand. 

"While 2020 was a challenging year for indigenous exports, with food and beverage exports suffering a decline, the pharma and ICT sectors recorded extraordinary export growth, driven by blockbuster immunological drugs, Covid related products, and the shift to home-working," he added.

But the Finance Minister said that GDP is not the most accurate measures of what is going on in the economy and to get an overall sense of what is happening on the ground, he focuses on three key figures. 

He said the domestic economy, as measured by MDD, contracted sharply, falling by 5.5 last year, a figure much closer to the typical fall across advanced economies. 

Household consumption also fell by 9% last year as the combined impact of a collapse in private consumption as a result of restrictions and extraordinary income supports by the State led to a near €15 billion increase in household deposits last year. 

And despite the wide-scale closure of the construction sector in the spring, Mr Donohoe said he was encouraged that the overall fall in house-building was considerably less than expected with a 2% decline over the course of the year. 

Overall almost 20,700 housing units were delivered last year, down by around 400 on the previous year, he noted. 

Paschal Donohoe also said that he expects a further contraction of the domestic economy in the first quarter of 2021 due to Level 5 restrictions, although not to the same extent as we saw last Spring. 

"For instance while retail sales in January were down 20% on December, this compares to a 35% decline in April last year," Mr Donohoe said. 

"Similarly there are roughly 130,000 less people on the PUP this week than at the peak in early May. Indeed we saw modest declines in the numbers on the PUP for the last three weeks and I am hopeful of continued declines in the weeks ahead," he added.