Production by Irish-based manufacturers declined by 13 per cent in the year to December, in line with trends emerging in many other countries.
Industrial production and turnover figures from the CSO show significant declines in the modern sector of the economy, including pharmaceutical and chemical manufacturing which declined by 20 per cent last year.
According to Dr Ronnie O'Toole, chief economist, National Irish Bank, while the monthly industrial production series is volatile, the "decline observed in the Irish figures today are consistent with what is being observed in a number of countries".
While the modern sector of the economy sector has been stronger than the traditional sector in recent years the industrial production decline experienced towards the end of 2008 affected all sectors.
He said this pointed to a significant contraction in global trade.
"In the short term it is unlikely this will have a significant impact on employment levels in export industries, which tend to be relatively insensitive to short term movements in demand. However, there is a genuine fear that the emerging fall in global trade could be deeper and longer than expected," Dr O'Toole said.
He pointed to forward-looking indicators of industrial production in Europe that indicated a rapid slowdown in activity with new orders for industrial products in the EU15 down between 15 to 30 per cent in November compared with the summer.