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S&P affirms S. Korea rating at AA with stable outlook
By Jung Min-kyungPublished : April 28, 2021 - 18:02
S&P Global Ratings affirmed South Korea’s credit rating at AA with a stable outlook, the Ministry of Economy and Finance said Wednesday.
Asia’s fourth-largest economy’s long-term sovereign credit rating has remained at AA -- the third-highest level on the agency’s rating scale -- since August 2016.
“While the Korean economy contracted for the first time since 1998, growth is back on track, and the decline was less than that of most other high-income economies by COVID-19,” the S&P report released in English via the ministry read.
“The stable outlook reflects our expectation that Korea will shake off the impact of COVID-19 over the next two to three years to return to growth rates higher than most other high-income economies,” it added.
S&P’s latest rating is in line with the rosy outlook surrounding the nation’s economy, buoyed by recovery in exports and private consumption in the first three months of the year.
Korea’s exports, which accounts for half of the nation’s economy, hit a record high in the first quarter, as it amounted to $146.5 billion in the cited period, up 12.5 percent on-year, according to the Korea Customs Service.
Private consumption, which had faltered due to the government’s strict social distancing rules in light of the pandemic, buoyed the rebound in GDP by gaining 1.1 percent on-quarter in the same period.
Finance Minister Hong Nam-ki and Bank of Korea Gov. Lee Ju-yeol forecast the nation’s economy to reach a mid-to high- 3 percent range this year.
S&P noted that the Korea’s fiscal deficit is projected to widen this year, but the general government balance should “return to surplus by 2023.”
While concerns surrounding the country’s slow progress with COVID-19 vaccinations continue to linger, S&P said that Korea’s “long-term growth prospects remain strong despite the disruptions caused by the pandemic.”
The Finance Ministry said that the S&P’s latest decision reaffirms the global economy’s trust in Korea amid ongoing risks stemming from the outbreak of the COVID-19 pandemic. The latest assessment is meaningful since 113 economies have seen their credit ratings or outcomes downgraded, it added.
By Jung Min-kyung (mkjung@heraldcorp.com)
Asia’s fourth-largest economy’s long-term sovereign credit rating has remained at AA -- the third-highest level on the agency’s rating scale -- since August 2016.
“While the Korean economy contracted for the first time since 1998, growth is back on track, and the decline was less than that of most other high-income economies by COVID-19,” the S&P report released in English via the ministry read.
“The stable outlook reflects our expectation that Korea will shake off the impact of COVID-19 over the next two to three years to return to growth rates higher than most other high-income economies,” it added.
S&P’s latest rating is in line with the rosy outlook surrounding the nation’s economy, buoyed by recovery in exports and private consumption in the first three months of the year.
Korea’s exports, which accounts for half of the nation’s economy, hit a record high in the first quarter, as it amounted to $146.5 billion in the cited period, up 12.5 percent on-year, according to the Korea Customs Service.
Private consumption, which had faltered due to the government’s strict social distancing rules in light of the pandemic, buoyed the rebound in GDP by gaining 1.1 percent on-quarter in the same period.
Finance Minister Hong Nam-ki and Bank of Korea Gov. Lee Ju-yeol forecast the nation’s economy to reach a mid-to high- 3 percent range this year.
S&P noted that the Korea’s fiscal deficit is projected to widen this year, but the general government balance should “return to surplus by 2023.”
While concerns surrounding the country’s slow progress with COVID-19 vaccinations continue to linger, S&P said that Korea’s “long-term growth prospects remain strong despite the disruptions caused by the pandemic.”
The Finance Ministry said that the S&P’s latest decision reaffirms the global economy’s trust in Korea amid ongoing risks stemming from the outbreak of the COVID-19 pandemic. The latest assessment is meaningful since 113 economies have seen their credit ratings or outcomes downgraded, it added.
By Jung Min-kyung (mkjung@heraldcorp.com)
