The Agency Cites Strong Exports, Stable Fiscal Outlook, and External Resilience
S&P Maintains South Korea’s Credit Rating at ‘AA’ with Stable Outlook; Per Capita GDP Forecast to Exceed $44,000 by 2029
International credit rating agency Standard & Poor’s (S&P) noted that South Korea’s economic growth rate came in at a subdued 1.0% last year but expected growth momentum to accelerate this year, maintaining South Korea’s sovereign credit rating at ‘AA’ with a ‘Stable’ outlook.
According to the Ministry of Economy and Finance on April 29, S&P made the announcement while noting that instability in global energy markets stemming from the Middle East conflict this year could pose a risk to the South Korean economy, but that the competitiveness of industrial sectors including semiconductors and fiscal policy would help mitigate those risks.
S&P also assessed that, while South Korea is a major importer of crude oil and natural gas, the country has sufficient buffer capacity to withstand energy supply shocks, backed by diversified supply sources and stable petroleum reserves. The agency projected that South Korea’s average growth rate would outpace most other high-income countries over the next three to four years.
S&P noted that South Korea’s growth came in at a weak 1.0% last year but expected the pace to pick up this year. It assessed that South Korea maintains a leading position in information technology (IT) sectors including semiconductors and holds a strong competitive edge in shipbuilding as well.
As a result, the South Korean economy is projected to grow at an average annual rate of approximately 2.1% in per capita gross domestic product (GDP) terms from 2026 to 2029, with per capita GDP expected to surpass $44,000 by 2029.
S&P assessed that South Korea’s institutional and policy environment is a key factor supporting its sovereign creditworthiness. It noted that the declaration of martial law in 2024 had partially eroded confidence in political stability, but that the swift lifting of martial law, the subsequent government response, and the formation of a new administration through elections had mitigated the negative impact.
Fiscal conditions were also assessed as stable. S&P projected that the general government fiscal balance deficit would reach 1.4% of GDP this year before narrowing to 1.1% by 2027. General government net debt was also seen as relatively low at approximately 9% of GDP this year. Contingent liability risks from domestic financial institutions were assessed as limited.
External soundness was cited as a further strength. S&P stated that South Korea maintains solid external resilience, backed by favorable net external assets and a sustained current account surplus.
The current account surplus for 2025 was recorded at 6.6% of GDP, and the agency projected that the surplus would remain above 6% of GDP over the next three to four years. This was presented as a factor that would support the gradual appreciation of the Korean won going forward.
S&P also assessed that the floating exchange rate system and the breadth and depth of an actively traded foreign exchange market provide the South Korean economy with a robust external buffer.
Risk factors were noted as well. S&P estimated that the debt of non-financial public enterprises stands at approximately 20% of GDP. Should instability in global energy markets persist due to a prolonged Middle East conflict, the financial burden on major state-owned energy companies could increase, the agency cautioned.
The potential cost of reunification in the event of a collapse of the North Korean regime was also identified as the most significant vulnerability for South Korea’s credit rating.
S&P further outlined conditions under which future rating changes could occur. An upgrade would be possible if security risks and contingent liability risks related to North Korea were resolved. Conversely, downward pressure on the rating could build if tensions with North Korea escalated to the point of causing serious damage to the economy and public finances, or if South Korea’s growth rate fell to the level seen in other high-income countries.
The Ministry of Economy and Finance emphasized, “This announcement reconfirms S&P’s confidence in the competitiveness and sustainability of the South Korean economy,” adding, “All three major international credit rating agencies, following Fitch and Moody’s earlier this year, have now maintained South Korea’s sovereign credit rating and outlook as stable.”
Jung Suk-yee
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