SEOUL, July 8 (Xinhua) - Global credit rating appraiser Moody's on Monday kept its sovereign rating on South Korea at "Aa2" with a "stable" rating outlook, according to Seoul's finance ministry.
Seoul (Photo: VCG)
The Aa2, the third-highest level on the Moody's rating table, has been maintained on the country since 2015 when the sovereign rating was revised up from Aa3.
Moody's said in a statement that the South Korean economy had "very strong" economic and fiscal fundamentals, which provided buffer against exposure to uncertain outlook for external trade.
It said the economy's reliance on international trade poses near-term drag from flagging external demand, but the rating company noted that the economy was highly diversified and competitive when compared with rating peers.
The assessment was a part of the rating appraiser's annual update, not its rating action.
Moody's said South Korea's very strong institutional framework bolstered its resilience to potential economic and financial stability risks while the government's sound fiscal position provided scope for countercyclical support for the economy.
However, it said the ongoing geopolitical risks posed unusually pronounced exposure to event risk for a sovereign in the Aa-rated category, adding that the country's primary credit challenges related to the long-term economic and fiscal costs brought on by a rapidly aging population.