The credit rating agency Fitch has maintained South Korea's national credit rating at 'AA-'. The credit rating outlook also remains 'Stable'. This is the first time among the three major credit rating agencies that a credit rating has been announced since the state of emergency.
According to the Ministry of Strategy and Finance on the 6th, Fitch assessed South Korea as having strong external soundness, stable macroeconomic performance, and dynamism in the institutional sector of exports, while also reflecting geopolitical risks and structural issues due to aging comprehensively in its evaluation.
Fitch has maintained South Korea's credit rating at AA- since upgrading it from A+ in September 2012. Recently, despite the increased political uncertainty due to the state of emergency and impeachment, it assesses that there will be no significant impact on the economy and the national system.
However, the forecast for South Korea's economic growth rate has been downgraded from 2.0% to 1.7%. This is lower than the forecast of 1.8% released by the government earlier last month. This figure reflects concerns about psychological downturn due to political uncertainty and reduced exports due to the imposition of universal tariffs by the Trump administration.
Fitch noted that if risks are alleviated and the tendency for government debt to decline relative to gross domestic product (GDP) is maintained in the medium term, the credit rating could increase. However, if the ratio of government debt increases due to prolonged political stalemate, there could be potential for a downgrade.
This year, South Korea's current account surplus is projected at 4.5% of GDP. It is evaluated that the current account surplus continues and that net foreign assets support South Korea's strong external soundness.
Despite the weakness of the won due to recent strong dollar phenomena, analysis indicates that the risk of capital outflow has been alleviated thanks to the government's robust policy response.
Regarding North Korean risks, Fitch assessed that tensions with North Korea are rising due to ongoing missile test launches and hostile remarks towards the South, complicating inter-Korean relations.
In particular, it analyzed that the recent close relationship between North Korea and Russia has alleviated North Korea's international isolation, making diplomatic approaches more difficult.
A Ministry of Strategy and Finance official said, 'With the announcement of this result, concerns from foreign investors about South Korea's external credibility are expected to be largely alleviated.'
Starting from the 11th, the Ministry of Strategy and Finance plans for International Financial Cooperation Ambassador Choi Jong-ku to visit Hong Kong and Singapore to hold close communications with the personnel responsible for South Korea's credit ratings at global credit rating agencies such as Fitch, Moody's, and Standard & Poor's (S&P).