Fitch Maintains South Korea's Sovereign Credit Rating at 'AA-' with a 'Stable' Outlook

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is delivering opening remarks at the 5th Economic Ministers' Meeting on COVID-19 Response and the 4th Economic Vitality Measures Meeting held on the 12th at the government Seoul office video conference room. Photo by Moon Ho-nam munonam@

[Asia Economy Reporter Jang Sehee] On the 12th, the international credit rating agency Fitch announced that it maintains South Korea's sovereign credit rating at 'AA-'.

Fitch explained the rationale by stating, "South Korea's credit rating shows sound fiscal soundness and continuous macroeconomic performance despite medium-term challenges from geopolitical risks related to North Korea and aging and low growth."

Fitch also evaluated that the South Korean government has fiscal capacity to expand short-term fiscal spending. Although the debt-to-GDP ratio increased from 38% in 2019 to 40.7% this year, it is slightly above the midpoint of the AA rating at 39.5%.

Fitch further stated, "Due to fiscal expansion, semiconductor price recovery, and easing of trade policy uncertainties, the growth rate is expected to recover to 2.4% this year," but added, "However, the spread of the novel coronavirus infection (Wuhan pneumonia) will be a new downside risk to growth through impacts on tourism, retail sales, and supply chain disruptions."

Meanwhile, the benchmark interest rate is expected to be cut by 25bp (1bp = 0.01 percentage points) within this year, and a low inflation rate averaging 0.5% is anticipated to continue this year as well.

This content was produced with the assistance of AI translation services.