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North Korea’s unpredictability main obstacle
South Korea’s credit rating can be raised when the risks from the North Korean nuclear issue have subsided, a top executive at a credit rating agency said. South Korea’s credit rating stayed at the level of "A3," or "good," but outlook was downgraded from "positive" to "negative" by influential Moody’s Investors Service, Inc. in 2003. Outlook was later moved to "stable," and in April this year, Moody’s moved it back to "positive." However, an expected move from the A3 rating bracket to a higher one, such as A2, A1, or into the "excellent" or "exceptional" investment security categories, has not yet occurred."Back in 2003, our primary concern was increased geopolitical risks associated with North Korea’s renewed development of nuclear weapons," Thomas Byrne, senior credit analyst at Moody’s Investors Service Inc., said in a ceremony to mark the opening of a representative office of the ratings agency in Seoul. Byrne cited South Korea, Israel, and Taiwan as the three countries covered by the agency’s ratings system which are subject to geopolitical risks. Even if the risk cannot be removed, it should be put under control in order for the agency to upgrade South Korea’s credit rating, Byrne added. Other bright spots for South Korea’s economic future are the government’s conservative budget planning and a positive macroeconomic outlook for Asia’s fourth-largest economy, Byrne said. Byrne said that South Korea’s rating would not worsen because of North Korea’s recent suspected moves by Pyongyang to test-fire a long-range missile. Moody’s projected that South Korea’s economy will grow 5 percent and 4.5 percent for this year and next year, respectively.
