Global rating agency Moody’s Investors Service said on July 8 that it is maintaining its rating on South Korea at Aa2 with a stable rating outlook.
Moody’s rating for Asia’s fourth largest economy has been Aa2, the third-highest level on the company’s table, since 2015, when the rating agency upgraded it from Aa3.
“The government of South Korea’s (Aa2 stable) credit profile balances the country’s very strong economic and fiscal fundamentals against high exposure to event risk, because of persistent geopolitical tensions,” Moody‘s Investors Service said in a report.
“South Korea’s economy is highly diversified and competitive when compared with rating peers, although its reliance on international trade poses near-term drag from flagging external demand.”
Moody’s said that South Korea’s very strong institutional framework bolsters the country’s resilience to potential economic and financial stability risks, while the government’s sound fiscal position provides scope for countercyclical support for the economy.
The ongoing risk of military confrontation with North Korea poses unusually pronounced exposure to event risk for a sovereign in the Aa-rated category.
By Ram Garikipati and newswires (firstname.lastname@example.org)