[EDITORIALS]A shock from Moody'sMoody's, the U.S. credit-rating agency, has lowered the outlook for South Korea's sovereign credit rating by two notches, a move that took us by surprise. If no major positive developments occur, the sovereign credit rating itself will be lowered soon. We cannot rule out the possibility that other credit rating agencies -- Standard & Poor's and Fitch -- might lower their ratings as well.
Although the credibility of these credit rating agencies has been called into question recently, the three agencies exert tremendous influence that translates into heightened pressure on the Korean economy. Korea Inc. knows first-hand, from an experience not long ago, how a drop in sovereign credit rating shook up the financial markets and increased the interest burden on foreign borrowing.
The main reason for the drop was a factor beyond our control: the North Korean nuclear issue. But the government is also to blame for its complacent response to the international community's growing concern about North Korea's nuclear capabilities. The government should have factored in the seriousness of the concern when Moody's delegation visited South Korea in late January. Instead, officials were busy promoting the Korean economy.
Moody's decision erodes our painstaking efforts to regain our lost creditworthiness. President-elect Roh Moo-hyun will take office burdened with dimming hopes for an economic recovery. There is no time to waste in addressing the negative factors and providing good information about the economy.
The new government will also have to work with the international community in dealing with North Korea.
Moody's has also expressed concern about the incoming administration's economic policies, in particular its policy orientation toward labor-management relations. The president-elect should respond swiftly to present a vision and policies that live up to global standards, ones that can sow trust in Korea by the international community and foreign and domestic investors.