Moody’s anticipate faster growth next year

The global credit rating agency Moody’s projected South Korea’s economic growth will gain momentum next year while sovereign and corporate credibility are likely to remain stable. However, it raised the geopolitical tension as a major risk.

“The healthy global growth outlook bodes well for South Korea’s economic performances, and the country’s strong fiscal and external positions provide a backdrop for structural reform,” said Moody’s Vice President and Senior Credit Officer Christian de Guzman on Wednesday in Seoul.

He added that the growth of the South Korean economy, whose trade dependency is relatively high, is improving at a faster rate than expected and that consumption and investments are also showing signs of recovery.

The Moody’s vice president noted that the continuing demand for semiconductors is a positive for the Korean economic growth outlook. The credit rating agency last month raised the Korea’s projected economic growth from 2.8 percent to 3 percent.

Yoo Wan-hee, also a Moody’s Vice President, said that tech companies, steel, refining and chemical sectors are likely to enjoy “favorable” operating conditions while the auto and retail industries are likely to continue to face challenges.

The credit agency projected corporate credit quality will remain stable thanks to healthy global economic growth. However, de Guzman noted that while the sovereign, macroeconomic conditions are stabilizing, geopolitical risk is rising as well.

He said the geopolitical tensions could have a huge impact on Korean financial institutions. Tensions between North Korea and the United States continue to intensify, with U.S. President Donald Trump recently referring to North Korean leader Kim Jong-un as short and fat on Twitter.

Moody’s also saw household debt as another risk for the Korean economy.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]