"COVID-19 Slump Temporary... Rebound Expected Next Year" S&P Maintains South Korea Credit Rating (Update)

On the 21st, when the KOSPI index started lower due to the impact of the international oil price crash, dealers were working in the dealing room of Hana Bank in Euljiro, Seoul. Photo by Moon Honam munonam@

[Asia Economy Reporter Choi Dae-yeol] The international credit rating agency Standard & Poor's (S&P) has maintained South Korea's sovereign credit rating at the same level as before. According to the data released by S&P on the 21st, South Korea's long-term sovereign credit rating was kept at 'AA', and the short-term sovereign credit rating remained at 'A-1+', unchanged from before. The credit rating outlook was also assessed as stable, maintaining the previous level.

S&P forecasted that South Korea's growth rate would record -1.5% this year due to the impact of the novel coronavirus disease (COVID-19), marking the first negative growth since 1998. However, it is expected to rebound from next year. The per capita gross domestic product (GDP) is estimated to slightly exceed $38,000 in 2023, up from $30,000 this year. The per capita real GDP growth rate is expected to be around 2.3%.

Regarding COVID-19, South Korea was one of the countries in Asia that suffered significant damage and caused a "temporary economic recession." However, the economic fundamentals are not expected to be severely damaged by this incident. As the number of patients decreases, economic activities are expected to recover. S&P explained, "The current shock is only temporary, and consumption suppressed during the COVID-19 pandemic will be released, and with government stimulus measures, GDP growth is expected to rebound to 5% next year," adding, "As global trade conditions normalize, investment should also recover."

The 'North Korea variable' is also expected not to be significant. S&P stated, "The geopolitical risk on the Korean Peninsula will not expand to the extent of damaging the economic foundation," and added, "If geopolitical tensions become severe enough to seriously affect South Korea's economy, we will downgrade the rating."

S&P has maintained South Korea's sovereign credit rating at 'AA' since raising it one notch from 'AA-' in August 2016.

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