The GDP of Ireland for Q4 declined 0.2 percent, according to data released by the Central Statistics Office on Thursday, which meant that the country has officially returned to recession.

Two quarters of economic contraction in a row will mean that a country has entered into recession. In Q3 the GDP of Ireland had contracted by 1.1 percent. Officially Belgium, the Netherlands, Italy, Portugal and Greece are other eurozone countries in recession.

A major problem for Ireland is that over half of its exports are going to euro zone and the UK, which are not seeing the best of times. With the economic crisis looming in these regions Ireland’s exports fell by 1.1 percent in Q4. One optimistic aspect for future can be that the U.S. economy is recovering, which could have some positive on the exports from Ireland.

Consumer spending did increase by 0.5 percent for Q4. At the same time a concerning factor is that the consumer confidence remains weak with January figures indicating a sharp fall in retail sales.

On a positive note the GDP increased by 0.7 percent for 2011, which is a much better figure than that for Greece and Portugal, who witnessed a decrease by -6.8 and -1.6 percent, respectively.

Capital Economics says that the latest Irish GDP figures are certainly not disastrous when compared to those of Greece and Portugal. But neither do they alter the view that Ireland’s domestic slump is far from over. The growth in net trade is expected to fade this year, pushing Ireland deeper into recession and making it difficult for the government to meet its fiscal targets.