19 July 2010 Last updated at 03:11 ET

Moody's downgrades Ireland rating

Previously thriving economic sectors may not recover soon

Ratings agency Moody's has downgraded the Irish Republic's sovereign bond rating to Aa2 from Aa1.

The ratings agency said the move had been driven by the government's gradual but significant loss of financial strength.

And it expects the country's economic growth to be below its historical trend in the next three to five years.

In June, it was revealed the Irish Republic had officially moved out of recession in the first quarter of 2010.

Ireland has suffered a severe contraction in GDP since 2008, causing a sharp decline in tax revenue.

And Moody's said the banking and property sectors, which had driven the economy before the global economic downturn, would not contribute strongly to overall growth in coming years.

It also pointed to the country's swelling levels of debt as a reason for the downgrade.

"Today's downgrade is primarily driven by the Irish government's gradual but significant loss of financial strength, as reflected by its deteriorating debt affordability," Dietmar Hornung, Moody's senior credit officer and lead analyst for Ireland, said in a statement.