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Korea's
sovereign rating upgrade by R&I
News Source : Ministry of
Finance & Economy
Seoul, Apr 11 2006 (Korea Newswire)--
Japanese credit rating agency R&I (Rating and Investment
Information) upgraded Korea's sovereign rating from A to A+
on April 11, 2006.
* Please refer to below for the R&I's press release.
Since the latter half of 2005, Korea's economy has shown a
remarkable recovery trend, and the outlook for the real
gross domestic product (GDP) growth rate in 2006 is around
5%. Unlike export-led growth in the past few years,
expansion of private sector facility investment is providing
the main impetus. Because the erosion of major firms'
willingness to invest has been stemmed to a certain extent,
Korea's medium to long-term economic growth prospects appear
to be more certain. Based on these considerations, R&I has
upgraded the Foreign Currency Issuer Rating from A to A+.
The real GDP growth rate for 2005 is estimated to have been
4.0%, with per capita GDP exceeding US$16,000. Led by major
companies' active facility investments, electronics
industries such as semiconductors have established worldwide
competitiveness. Industries such as automobiles and steel
also are highly competitive, and have maintained export
growth despite rapid appreciation of the won since 2004.
Despite the impact of high crude oil prices, the current
account surplus is expected to continue in 2006 as well. The
government maintains fiscal balance, and its fiscal
indicators are strong. The financial system also is sound.
The Rating Outlook is Stable. While public opinion views the
widening disparity in wealth as a problem, the
counter-measures should not distort market mechanisms. For
industry structure, promotion of service industries and SMEs
is likely to become the long-term theme. Other future issues
are the easing of excessive regulations on the chaebol and
labor market flexibility. Negotiations to conclude a Free
Trade Agreement with the U.S. inevitably will be rocky. With
less than two years remaining in President Roh Moo-hyun's
term of office, resolution of these issues is likely to be
handed to the next administration. Circumstances surrounding
North Korea will remain fluid in the future as well, but R&I
expects the related countries will continue to seek for a
solution through dialogue.
