Fitch ratings affirm South Korea at AA-, outlook Stable
In its latest credit review of the South Korean economy, Fitch Ratings affirmed Korea's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'AA-' with a Stable Outlook.
Key takeaways
“The pandemic has weighed on economic growth and public finances, but domestic control of the virus accompanied by a robust policy response have limited the severity of the deterioration in these metrics relative to other advanced economies and 'AA' peers.”
“We forecast the Korean economy to contract by a modest 1.1% in 2020 ('AA' median 7.1% contraction), reflecting an effective coronavirus containment strategy without the need to resort to strict lockdown measures.”
“We forecast the fiscal deficit to widen to 4.4% of GDP (including social security funds) in 2020, from a 0.6% deficit in 2019, as a result of the fiscal response measures to the pandemic and the government's planned pre-pandemic fiscal stimulus. At this level, Korea's fiscal deficit in 2020 is modest compared with the forecast 'AA' median of 8.6% of GDP.”
Market reaction
USD/KRW has stalled its upside, now reversing from two-day highs of 1,165.92. The spot post smalls losses to trade at 1,163.43, as we write.
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
