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Fitch holds Korea's rating steady despite martial law impacts

Published: 06 Feb. 2025, 18:58

SHIN HA-NEE
[email protected]

The Fitch Ratings logo is seen at the agency's offices in London on March 3, 2016. [REUTERS/YONHAP]

Fitch Ratings maintained Korea’s sovereign credit rating but warned that the fallout of President Yoon Suk Yeol’s Dec. 3 martial law declaration could undermine the country’s political efficiency and economic outlook down the line.

The credit rating agency said Thursday that it had affirmed the country's long-term foreign currency rating of AA- but downgraded its growth outlook for the country this year from its previous projection of 2 percent to 1.7 percent, citing dampened economic confidence and moderation in export growth weighed down by U.S. trade policy uncertainty.

“A recent sharp rise in political uncertainty is likely to persist in the coming months,” noted Fitch in its commentary, “and while we do not expect it to materially and durably undermine Korea's institutions, governance or economy, this remains a risk if the crisis persists for an extended period.”

The agency added that “sustained political gridlock could erode policymaking effectiveness, economic outcomes and fiscal management over time.”

BY SHIN HA-NEE [[email protected]]