Deputy Prime Minister and Minister of Strategy and Finance Choi Kyunghwan talks about Moody’s recent upgrade of Korea’s sovereign ratings to Aa2 during a press conference on Dec. 20.
Moody’s Investors Service upgraded Korea’s issuer and bond ratings by one notch to Aa2, from Aa3, on Dec. 18, the highest ever rating that the nation has received from the international credit agency.
The Aa2 rating is the third-highest among Moody’s 21 rating levels. Only seven countries among G20 member states, including Korea, the U.S., Germany, Canada, Australia, the U.K. and, lastly, France, have received a rating of Aa2.
The upgrade came just eight months after the credit rating agency last April kept the nation’s rating at Aa3 and raised its outlook from “stable” to “positive.”
According to Moody’s, the key drivers behind the upgrade were its expectations that, first, the nation’s credit metrics will remain strong and resilient. The second driver, it said, lies in the nation’s institutional strength that will support the continued implementation of the government’s structural reforms.
Moody’s outlook for Korea’s economic growth over the next five years has it growing faster than other advanced economies. The nation’s per capita income will continue to converge with those of developed economies in Europe. On top of that, Moody’s expects Korea to continue to post fiscal surpluses of about 0.5 percent of GDP, and that general government debt will remain stable at around 40 percent of GDP. It also pointed out that the nation’s total external debt has logged a drop, to less than 30 percent from 50 percent.
In addition, the agency expects that the government’s structural reforms in four areas — public services, labor, finance and education — will succeed, further promoting economic growth and fiscal resilience. The ratings agency also said that the government has been good at mitigating risks in the financial sector by conducting pension reforms and altering the structure so that high household debt can be curtailed.
Deputy Prime Minister and Minister of Strategy and Finance Choi Kyunghwan stated on Dec. 20 in a press conference that, “Amid growing uncertainties in the global financial market, this upgrade is of great significance for the Korean economy and inspires our confidence in future economic growth. We will retain our momentum as our economy starts turning around and will accelerate our structural reforms.”
By Sohn JiAe
Korea.net Staff Writer
Photos: the Ministry of Strategy and Finance
jiae5853@korea.kr
