(Photo= Yonhap news)

[Alpha Biz= Reporter Paul Lee] On the 9th, international credit rating agency Moody's announced that it would maintain South Korea's national credit rating at the existing Aa2 level. Aa2 is the third-highest rating in Moody's evaluation, following Aaa and Aa1. The credit rating outlook was also maintained as 'stable.'

Moody's predicted that South Korea's economic growth rate for this year would reach 2.5%, buoyed by the semiconductor cycle and recovery in capital investment. However, it anticipated that over the next few years, the growth rate would stabilize around 2% due to factors like declining productivity.

Despite tensions in the semiconductor industry arising from the US-China trade conflict, Moody's forecasted that South Korea's position in the global supply chain would not be significantly affected.

Moody's outlined several downward factors, including geopolitical risks due to military conflicts or a collapse of the North Korean regime, structural damage to potential growth, and failure to mitigate fiscal deterioration caused by aging population-related spending pressures.

Moody's evaluated that South Korea's national debt remains similar to or lower than that of other advanced countries, with maintained fiscal capacity to respond to economic cycles. It pointed out increased spending in healthcare and social welfare due to population aging as a fiscal burden factor.

The fiscal deficit is at a similar level to other Aa2-rated countries, and Moody's mentioned significant financial resources from entities like the Korea Investment Corporation (KIC) and the National Pension Service as buffers against fiscal risks.

 

 

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