International credit rating agency S&P maintained its sovereign credit rating and outlook for South Korea at the current levels, "AA" and "Stable," on Nov. 6. The agency adjusted the rating from "AA-" to "AA" in August 2016 and the rating has not changed since then.
“At present, the solid growth of the South Korean economy is contributing to a high level of fiscal and monetary flexibility and its satisfactory external soundness, the South Korean economy is diversified without dependence on specific industries or export markets, and the average per-capita GDP of South Korea is expected to increase from US$31,800 to US$35,000 from this year to 2022,” it explained, adding, “The GDP trend rate is 2.2 percent, which is higher than those of many high-income countries, although South Korea’s export growth for this year is rather sluggish due to international and regional factors.”
It also said that the depth of South Korea’s foreign exchange market, its flexibility in terms of foreign exchange, and its continuous current account surplus are protecting the South Korean economy well from external factors. In addition, the agency praised the South Korean government for its fiscal and monetary policies although it mentioned the possibility of government support for non-financial public enterprises and large household debts as negative factors on the fiscal and monetary sides, respectively.
“South Korea’s sovereign credit rating and outlook are likely to hinge on geopolitical risks from now on and this is because North Korea-related risks can have an adverse impact on South Korea’s economic, fiscal and external sides,” it went on to say.
The other two of the three major international credit rating agencies recently maintained their current levels, too. Moody’s rating and outlook for South Korea are "Aa2" and "Stable" and those of Fitch are "AA-" and "Stable."