Higher than China, Japan
The S&P has raised Korea’s credit rating to AA-. Under the circumstances, Deputy Prime Minister and Minister of Strategy & Finance Choi Kyung-hwan’s economic policy is enjoying a more favorable evaluation. At present, Korea’s credit ratings assigned by the world’s three-largest credit rating agencies are higher than ever, and the average is higher than that of China and Japan.
The S&P mentioned favorable policy environments as a reason for upward adjustment. According to it, Korea is expected to show more solid growth than most advanced economies for three to five years to come, its per-capita GDP is likely to exceed US$30,000 in 2018, and its sluggish export performance these days is not so worrying in comparison to those of other countries. It also explained that Korea’s government debt ratio, which is estimated to go over 40 percent next year, is no serious matter, because the consolidated fiscal balance has remained in the black since 2000 with few exceptions, and the net government debt is just slightly over 20 percent of the GDP this year. It said that Korea is a net creditor country, and its net credit amount is estimated to reach 21 percent of its current account receipts this year, adding that the ratio of short-term debts to current account receipts has declined as well. The recent relaxation of the tension between Seoul and Pyongyang seems to have contributed to the higher credit rating, too.
In the meantime, China’s credit rating assigned by Moody’s is Aa3, equal to its rating for Korea, while Fitch has given A+ to China, a notch below Korea’s. The agencies’ ratings for Japan are A1 and A. Korea has become the only country since last year that showed a rise in credit rating to at least AA-.