In its quarterly Spring Economic Commentary, the ESRI said that if Government measures to combat the spread of the virus remain in place for a 12 week period, the economy would shrink by 7.1% this year.
The labour market, which had been in a position of strength before the spread of the pandemic, is also set to face the largest quarterly shock in living memory, according to the ESRI.
It predicts that the unemployment rate will increase to 18% in the second quarter of the year from 4.8% in the previous quarter, as over 350,000 people lose their jobs.
The ESRI said that given the uncertainty around the coronavirus outbreak, it is not possible to undertake traditional economic forecasts, but today's commentary provides a scenario analysis which attempts to assess the economic impact of the current restrictions and closures.
The think-tank said that consumption, investment and net trade would all fall sharply as households cut spending, firms cancel or postpone investment and external demand for Irish goods and services fall.
It also noted that its current scenario may turn out to be too benign. On the general government balance, which had been expected to be in surplus at the start of the year, the ESRI is now predicting a 4.3% deficit.
It said this is as a result of the significant fall in revenues the exchequer will face due to the contraction in the economy. "It also reflects the significant increase in spending the government will implement in order to support workers who have lost their jobs, assist businesses facing declines in revenue and provide additional health expenditure needed to combat the virus," the think-tank added.