National Credit Unchanged
Moody’s maintained its credit rating for South Korea at Aa2 and its credit rating outlook for the country at stable on October 18.
The credit rating agency changed the rating from Aa3 to Aa2 in December 2015 and South Korea has maintained the rating since then. Aa2 is the third-highest rating in the credit rating classification of Moody’s.
The agency explained that its decision was made based on South Korea’s robust economic recovery, fiscal soundness and transparent government systems. “Although the rapid aging of the population, corporate restructuring and its large household debts can potentially hinder the growth of the South Korean economy, it is expected to show an annual growth of 2% to 3% for five years to come,” it said, adding, “Its strengths also include a high level of competitiveness for innovative growth.”
It also remarked that the South Korean government is currently distinguishing itself in terms of effective policymaking and policy execution as well as the transparency and predictability of policy. According to the credit rating agency, the South Korean economy’s potential risk factors include military tensions in the Korean Peninsula and the possibility of a sudden collapse of the North.