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The international credit rating agency Fitch Ratings maintained South Korea’s national credit rating at “AA-,” with a stable outlook for an upgrade. This leaves South Korean unchanged at a time when the national credit ratings of the US, the UK, and a number of other countries have been downgraded amid the COVID-19 pandemic.

On Oct. 7, the South Korean Ministry of Economy and Finance (MOEF) announced, “Following a conference call in September, Fitch gave South Korea the credit rating of ‘AA-,’ which represents the fourth stage among its highest ratings.” The rating has been maintained for over eight years since being upgraded in September 2012.

Fitch based its credit rating assessment on factors including geopolitical risks associated with North Korea, trends of population aging and low growth, and other intermediate-term structural challenges, along with positive external soundness, steady achievement of macroeconomic results, and financial potential, MOEF explained. South Korea’s economic growth rate for this year has been projected at -1.1%, in consideration of its effective response to the pandemic without lockdown measures. The rate is considerably higher than the -7.1% projected average economic growth rate for other countries with the same credit rating. Its fiscal deficit was predicted to rise to 4.4% from 0.6% last year, which was viewed as “appropriate” in comparison with increases to as high as 8.6% among other countries with the same rating amid their fiscal policies in response to the pandemic. At the same time, it observed that a large burden of debt could become a financial risk factor in light of the growing fiscal expenditures associated with the aging population trend.

MOEF said the rating was “significant in reaffirming the international creditworthiness of the South Korean economy at a time of historically large downgrading of national credit rating predictions amid the global economic stagnation caused by COVID-19.” Fitch has made 81 national credit rating adjustments this year, including downgrades for the UK (from AA to AA-/Negative) Canada (from AAA to AA+/Stable), and Japan (from A/Stable to A/Negative). The three major international credit rating agencies, including Moody’s and Standard & Poor’s as well as Fitch, have made 211 credit rating adjustments for 107 countries this year.

By Lee Jeong-hun, staff reporter

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