Moody’s keeps South Korea’s credit rating at ‘Aa2’…sees 1.8% growth this year

JOON HYOUNG LEE

Summary

Moody’s, the global credit rating agency, said it has maintained South Korea’s sovereign credit rating at 'Aa2, stable,' unchanged.
Moody’s forecast South Korea’s economic growth at 1.8% this year and said it would stabilise around 2% over the longer term.
Moody’s said that, due to population ageing and other factors, the government debt-to-GDP ratio could exceed 60% by 2030, and assessed that geopolitical risks and trade- and investment-related risks have widened.

Moody’s, the global credit rating agency, said on the 12th (local time) that it has maintained South Korea’s sovereign credit rating at ‘Aa2, stable,’ unchanged.

Aa2 is the third-highest rating in Moody’s scale, following Aaa and Aa1. Explaining the rationale for the decision, Moody’s said it “reflects in a comprehensive manner South Korea’s very high level of economic diversification and competitiveness, the institutional capacity to manage key challenges, structural issues stemming from population ageing, rising government debt, and geopolitical risks.”

Moody’s forecast South Korea’s economic growth at 1.8% this year. Over the longer term, it expects growth to stabilise around 2%, broadly in line with other advanced economies.

Moody’s also said that, due to mandatory spending including ageing-related costs, South Korea’s government debt-to-GDP ratio could exceed 60% by 2030. On geopolitical risks, it noted persistent tensions with North Korea, while assessing that the scope of risks has widened to include trade and investment risks such as recent domestic political polarisation, South Korea–U.S. tariff negotiations, and U.S.–China technology rivalry.