(Article from Korea.net)
Fitch Ratings intends to keep Korea’s sovereign debt rating at “AA-“and its outlook “stable.”
Explaining why it affirmed the rating and outlook, the ratings agency said on August 22 that Korea’s fundamental strengths remain intact, mentioning the country’s “resilient economy and robust macroeconomic policy including sustained fiscal discipline and a flexible exchange rate.”
In a statement, the agency said, “These factors leave Korea well-positioned to cope with the risks of high household debt, and a volatile global economic and financial environment.”
Despite the slow global economy, Korea’s real GDP grew 1.5 percent on-year in the first quarter of this year and 2.3 percent in the second quarter, according to the agency. It anticipates 2.6 percent growth in real GDP for the entire year and 3.4 percent next year.
The agency took notice of Korea’s reduced short-term external debt, large foreign-exchange reserves of USD 329.7 billion, and current account surplus, saying the country’s macroeconomic resilience and policy flexibility can work as a buffer against risks to household debt and liabilities of state-owned enterprises.
Fitch raised Korea’s credit rating to its current level of AA- in September 2012 and kept it ever since, while Moody’s Investors Service and Standard & Poor’s have maintained the country’s ratings at Aa3 (August 2012) and A+ (September 2012), respectively.
By Limb Jae-un
Korea.net Staff Writer