Prime Minister Brian Cowen must deal with the threat of a recession
The Irish Republic's economy has shrunk in the first three months of the year, official figures show.
The Central Statistics Office (CSO) said gross domestic product (GDP) fell 1.5% in the quarter - its first quarterly drop in a decade.
The report said a building slump and slower exports due to the high value of the euro were a drag on growth.
Some analysts predict that the Emerald Isle will experience a recession for the first time in 25 years in 2008.
Technically, a recession is defined as two quarters of negative growth.
Earlier this month, the Economic and Social Research Institute predicted the Irish economy would contract by 0.4% over the year after growing by 6% last year.
The consultancy also said that unemployment would rise to more than 7% next year from below 5% in 2007, forcing more people to leave the country in search of jobs.
End of the boom?
Analysts said the CSO figures suggest that the Irish Republic's 10-year boom is running out of steam.
"The contraction in the Irish economy in the first quarter confirmed that the boom of the last decade has finally turned to bust," said Capital Economics analyst Jonathan Loynes.
"It seems very likely that the economy is heading into a property-led recession," he added.
Gross National Product data, which strips out the earnings of foreign multi-nationals, was slightly better, up 0.8% over the last quarter.
The report from the CSO also showed that shoppers were not holding back, with consumer spending up 3.5% compared with the same period in 2007.
But analysts have focused on capital investment, which fell 18.6% due to the steep decline of the country's residential house building market.
The fear is that the problems could spread to commercial property and lead to further woes for the economy.