Prostitution and profits from the drugs trade have given an added boost to Ireland's improving economy.

With some illegal activities now included in revised measurements of the wealth of the nation, new figures show Irish businesses grew by 0.2% last year.

The latest official economic data also showed that the value of all goods and services, measured by gross domestic product (GDP), increased by 2.7% in the first three months of the year.

And the homegrown economy was also holding up, with gross national product, the value of Irish-owned businesses, growing by 0.5% in the same period.

Earlier estimates said the Irish economy shrank last year, with businesses suffering under a 0.3% contraction in value.

But under new European rules, statisticians are now using advice from police chiefs to estimate the value of profits from drug deals and money spent in some of the vice trades.

The Central Statistics Office (CSO) report on the first quarter of the year and revised estimates for 2013 reveal the value of Irish-owned business increased by 0.5% in that period.

The inclusion of illegal activity - fuel-smuggling had already been counted - was designed to make economic reports across Europe more comparable and followed initiatives in Britain and Italy.

The book-keeping report states that illegal activities made up 0.7% of the Irish economy last year - in the region of 1.2 billion euro.

The Immigrant Council of Ireland said the scale of the profits shows the foothold that organised crime has in Irish society with the proceeds of crime fuelling sex-trafficking, human rights abuses and women and girls being repeatedly raped and abused in brothels.

Denise Charlton, chief executive of the Immigrant Council, said laws targeting buyers of sex would go a long way to reducing the scale of the problem.

"People will be rightfully shocked that pimps, pushers and traffickers are using criminal activity to take cash which would otherwise be spent in legitimate businesses where it would create jobs and support the economic recovery," she said.

The Immigrant Council of Ireland said that in Europe human traffickers are pocketing an estimated 25 billion euro a year by exploiting up to a million people.

The CSO has also included the value of the research and development industry in the latest reports, making up 4% of the economy last year.

Finance Minister Michael Noonan said the CSO report highlighted the renewed strength of the Irish economy.

"The upward revision to the level of GDP last year, in line with technical changes being implemented in all EU member states, has a favourable impact on both our deficit and debt ratio," he said.

Department of Finance forecasts had expected a deficit of 4.8% of GDP for this year.

Based on the revised CSO figures the deficit is on course to be 4.5% in the Stability Programme last April.

"Indeed, if tax revenue continues to perform as it has done in the first half of the year, the out-turn could be even better," Mr Noonan said.

The minister said the growth figures were also encouraging.

"As had been anticipated, domestic demand made a positive contribution, which is welcome as this is both tax and employment rich," he said.

Mr Noonan also pointed to improved unemployment figures and retail sales as signs of continued recovery.

"So it is clear that the difficult but necessary decisions taken over the past number of years have provided a strong and stable foundation for recovery, growth and job creation," the minister said.

PA Media