COVID-19 Impact on Korean Economy Likely to Be Limited
International credit rating agency Moody’s has maintained its credit rating and outlook for South Korea at "Aa2" and "Stable," respectively.
“As seen in its response to the COVID-19 pandemic, South Korea is in possession of excellent governance capabilities and effective macroeconomic, fiscal and monetary management capabilities to deal with impacts,” it said, adding, “South Korea is expected to maintain its solid growth potentials and fiscal statuses for a while.”
It also mentioned that South Korea is dependent on exporting manufacturers and participating in regionally divided supply networks and its exposure to impacts can affect its domestic consumption and investment. “Still, the impact of COVID-19 on the South Korean economy is likely to be limited and the South Korean government’s fiscal and debt conditions are unlikely to deteriorate to a significant extent,” it went on to say.
As of this month, France, Abu Dhabi, Britain and Kuwait have the same sovereign credit rating as South Korea, which has maintained that level since December 2015.
The credit rating agency also said that the rapid aging of the South Korean population is likely to hinder the growth of the South Korean economy while adding to the government’s debt burden in the long term and its geopolitical risks still remain with efforts for peace in the Korean Peninsula showing insufficient progress.