Irish economy 'to contract by 6%'

Mr Hurley said his outlook was likely to get worse, not better

The Irish Republic's economy will shrink by more than 6% this year, the country's top central banker has said.

Unemployment will average about 11%, John Hurley, the governor of Ireland's central bank, told a committee of MPs.

That kind of contraction would make Ireland one of the worst-hit economies in Europe by the global downturn.

Mr Hurley also admitted "risks to this outlook remain to the downside" and said central banks were looking at "non-standard" policies.

The head of the International Monetary Fund (IMF) has warned that the world economy is likely to shrink for the first time in decades in 2009, while on Monday the IMF's sister institution, the World Bank, said that it also expected the world economy to shrink.

"No one should be in any doubt about the seriousness of the global situation, which is not easing, and the seriousness of our own difficulties," Mr Hurley said.

Rising unemployment

Mr Hurley also revealed that the European Central Bank (ECB), which looks after monetary policy in the eurozone, is looking beyond interest rate cuts to help stimulate the economy and is "studying possible non-standard monetary policy measures".

That could mean the ECB will follow the lead of the Bank of England, which has said it will pump £75bn of extra money into the economy in a policy that is known as quantitative easing.

The Irish Republic, which was once one of Europe's fastest-growing economies, has fallen into recession faster than many other members of the European Union.

The country officially fell into recession in September 2008, and unemployment has risen sharply in the following months.

The numbers of people claiming unemployment benefit in the Irish Republic rose to 326,000 in January, the highest monthly level since records began in 1967.