Fitch says Korean economy is stable, growing

Major credit ratings agency Fitch said Friday the Korean economy is very stable and growing substantially.

Thomas Rookmaaker, head of Asia-Pacific sovereigns at Fitch, visited Korea on Friday for an annual meeting and met with Korea’s Minister of Strategy and Finance Yoo Il-ho at the National Assembly. They exchanged views on the Korean economy and the government’s fiscal policies.

According to the Ministry of Strategy and Finance Friday, Rookmaaker said, “The Korean economy is very stable and strong compared to other major countries around the world.”

Furthermore, Fitch was positive about Korea’s fiscal sustainability and various government policies such as the ongoing corporate restructuring.

“Fitch, however, warned that there still are geopolitical risks remaining here in Korea due to North Korea and that South Korea should approach them carefully to deal with such risks,” said Choi Ji-young, a director at the Finance Ministry.

According to the Finance Ministry, Finance Minister Yoo appreciated Fitch’s positive view of Korea’s economy, even though major credit ratings agencies are downgrading countries around the world.

“Finance Minister Yoo has told the Fitch officials that the government is managing uncertainties both domestic and overseas, while focusing on improving the domestic economic conditions by pushing through various fiscal policies, including that of executing a supplementary budget,” said Choi. “Furthermore, Yoo and Rookmaaker discussed ongoing structural reforms in four sectors of the Korean economy: labor, education, public administration and finances.”

According to the Finance Ministry, Yoo told Fitch that the Korean economy has remained very stable and some economic figures have improved compared to Sept. 2012, which was when the ratings agency upgraded Korea’s rating by one notch from A+ to AA-.

Standard and Poor’s (S&P) upgraded Korea’s sovereign credit rating to a record high of AA from AA- earlier this month, and Moody’s gave Korea the ranking of Aa2, which is equivalent to S&P’s AA, in December.

S&P said Korea’s superior track record of steady economic growth has generated a prosperous economy, greater fiscal and monetary flexibility, and continual improvements in external metrics, in a press release earlier this month.

AA is the third highest credit ratings and Korea now ranks with Great Britain, France and Belgium in S&P’s ratings.

Fitch is the only major credit agency that gives Korea an AA- grade, or the fourth highest credit rating, among the three major agencies.

Ever since Oct. 2005, Korea’s ratings remained at A+ for more than 6 years, or until Sept. 2012, when Fitch decided to upgrade it one notch higher to AA-.

Korea ranks with Saudi Arabia in Moody’s ranking system, and there are nine countries that are ranked higher than Korea: the United States, Germany, Canada, Australia, Singapore, Hong Kong, the United Kingdom, France and Belgium.

Meanwhile, Korea’s annual meeting with Moody’s is scheduled for the second week of September.

BY KIM YOUNG-NAM [kim.youngnam@joongang.co.kr]