Moody's Maintains South Korea's Credit Rating at 'Aa2'... "Limited Impact from COVID-19"

[Asia Economy Reporter Cha Min-young] International credit rating agency Moody's maintained South Korea's sovereign credit rating at 'Aa2' on the 12th and continued the rating outlook as 'stable.'

Moody's cited the limited economic damage to South Korea despite the spread of the novel coronavirus infection (COVID-19) as the reason for maintaining the rating. Additionally, it judged that government finances and debt would not deteriorate sharply.

Moody's explained, "Compared to countries with similar ratings, South Korea's economic damage from COVID-19 is limited, and government finances and debt conditions will not significantly weaken," adding, "As demonstrated during the COVID-19 crisis, South Korea possesses strong governance and effective macroeconomic, fiscal, and monetary management capabilities in response to shocks." It also expected the country to maintain relatively robust growth potential and strong fiscal and debt indicators.

However, Moody's added a caveat that, as a export-oriented manufacturing country amid the COVID-19 pandemic, South Korea would inevitably face impacts on consumption and investment. It also pointed out the persistent risks of aging population and geopolitical tensions with North Korea.

Moody's stated, "In the long term, aging will constrain growth and increase the burden of government debt," and "Geopolitical risks continue amid insufficient progress toward peace settlement with North Korea."

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