Despite the Japan-South Korea trade dispute taking a toll on the South’s economic growth prospects, the US-based Fitch rating agency affirmed South Korea’s sovereign credit rating at “AA-” with a “stable” rating outlook on Friday, Xinhua reports.
Key Quotes:
“The sovereign rating balanced robust external finances, steady macro-economic performance and sound fiscal management against evolving geopolitical risks and the mid-term structural challenges from aging demographics and low productivity.
South Korea’s economic growth momentum slowed considerably over the past year amid the slowing global growth and the global trade dispute.
The country’s underlying growth performance remained sound and broadly in line with peers, predicting an economic growth of 2.0 percent in 2019 after expanding 2.7 percent in 2018.
Forecasts South Korea’s economic growth would recover to 2.3 percent in 2020.
On Japan’s export curbs, Fitch said these actions were likely to disrupt supply chains and create uncertainty for South Korean firms’ ability to import inputs from Japan.
More broadly, the Japanese actions could weigh on business confidence and investment in South Korea.”
Meanwhile, the USD/KRW cross fades the latest bounce to 1,211 levels, with the Won back in the red zone after three straight days of recovery.
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