Ministry of Finance and Economy

1. Key Points of Moody’s Ratings’ Rating Action Commentary   On February 12, Moody’s, a global credit rating agency, announced that it has affirmed Korea’s sovereign credit rating at Aa2 with a Stable outlook. Moody’s stated that its decision reflects Korea’s very high level of economic diversification and competitiveness, as well as its institutional capacity to effectively manage key challenges, while also taking into account structural issues stemming from population aging, rising government debt, and geopolitical risks.   According to Moody’s, Korea’s economic growth slowed to 1.0% year-on-year in 2025; however, growth is projected to reach 1.8% in 2026, supported by increased semiconductor exports amid the global AI boom and a recovery in capital investment.   In addition, Korea’s growth rate is expected to stabilize at around 2% over the longer term, broadly in line with other advanced economies. Such stabilization would be underpinned by productivity gains arising from AI adoption across both the corporate and public sectors, as well as capital market and corporate governance reforms and efforts to promote balanced regional development, despite a declining labor force.   Moreover, Korea’s strategy to further diversify its export portfolio, leveraging its strong competitiveness in industries such as defense and shipbuilding beyond semiconductors, is expected to provide additional support to growth. Capital market reforms are also seen as a key pillar of the government’s broader growth agenda, particularly in strengthening corporate governance among large business groups and promoting investment.   On the fiscal front, government debt has increased due to pandemic-related support measures and fiscal spending aimed at boosting consumption and growth. Debt is projected to exceed 60% of GDP by 2030, reflecting rising mandatory spending pressures, including population aging and higher defense expenditures. Nevertheless, the rating incorporates the assumption that reform measures, such as expenditure rationalization and efforts to broaden the revenue base, will achieve a moderate degree of success.   With regard to geopolitical risks, continued tensions with North Korea were highlighted. At the same time, the scope of risks has broadened in recent years to encompass domestic political polarization and trade- and investment-related uncertainties, including tariff negotiations between Korea and the U.S., and intensifying U.S.-China technology competition. Against this backdrop, diplomacy and institutional policymaking have taken on heightened importance in maintaining balanced relationships among diverse economic stakeholders.     2. Government’s Assessment and Policy Responses   The affirmation of Korea’s sovereign credit rating and outlook (Aa2, Stable) underscores Moody’s firm confidence in the strength and sustainability of the Korean economy. In particular, following last month’s affirmation by Fitch Ratings, this latest announcement marks the second consecutive confirmation by a major international credit rating agency of Korea’s rating at a stable level, reflecting the continued positive perception abroad of the economy’s internal and external soundness.   In advance of the latest rating announcement by Moody’s, the government actively engaged in the annual consultation process in close coordination with the relevant ministries. In January, Deputy Prime Minister Koo Yun Cheol met with the agency’s annual consultation mission to underscore the competitiveness of the Korean economy. Going forward, the government will maintain close communication with international credit rating agencies while making continued efforts to preserve Korea’s robust sovereign credit profile.             ※ This document is a summary of Moody’s Ratings’ press release provided for media convenience. For full details and exact language, please consult the original Moody’s Ratings release available at the link below:  https://www.moodys.com/research/Moodys-Ratings-affirms-Koreas-Aa2-issuer-rating-maintains-stable-outlook-Rating-Action--PR_518816   Please refer to the attached files. 

The Ministry of Finance and Economy is holding a three-day meeting of financial attachés from February 11 to 13. Financial attachés are currently stationed in 14 overseas missions across 12 countries*, where they engage in cooperation with host governments and international organizations in the areas of fiscal, economic, and financial affairs, monitor key policy developments, and support the Ministry’s international affairs   * The United States; China (Beijing/Shanghai); Hong Kong; Japan; Indonesia (ASEAN); Viet Nam; Thailand; the United Arab Emirates; France (OECD/Paris); Belgium; the United Kingdom; and Russia.   At the meeting, participants discussed major economic issues and policy directions in their respective host countries, as well as ways to enhance economic cooperation. Key issues and pending matters at international organizations, including the OECD and ASEAN, were also discussed. In addition, based on briefings by Ministry officials on key domestic and external economic issues, in-depth exchanges of views were held between the Ministry and the financial attachés on major issues at home and abroad.   Furthermore, Deputy Prime Minister and Minister of Finance and Economy Koo Yun Cheol will hold a discussion session with financial attachés on innovation cases on February 13 at the Government Complex-Seoul. The discussion session has been organized to provide an opportunity for financial attachés from each country to share innovation cases being pursued at their respective posts and to explore policy implications through open discussions. In particular, the session will be broadcast live on KTV, and innovation cases observed on the ground, as well as the discussions themselves, will be made available to the public.   Please refer to the attached files.

1.       In January 2026, the employment rate for those aged 15 and above stood at 61.0%, unchanged from a year earlier. The employment rate for those aged 15 to 64 rose by 0.4%p year-on-year to 69.2%. The labor force participation rate increased by 0.2%p from a year earlier to 63.6%, while the unemployment rate rose by 0.4%p year-on-year to 4.1%.   * Employment Indicators for January (2025 → 2026, %):     Employment rate 61.0 → 61.0             Labor force participation rate 63.4 → 63.6              Unemployment rate 3.7 → 4.1   By age group, the employment rate increased for those in their 30s (80.5%, +0.5%p), 40s (80.0%, +1.2%p), and 50s (77.5%, +1.0%p), while it declined among those aged 60 and over (41.8%, -0.5%p), and youth (43.6%, -1.2%p).   Both the labor force participation rate and the employment rate for those aged 15 and older marked the highest levels ever recorded for the month of January. The employment rate for those aged 15 to 64 also reached a record high for January.   2.       The number of employed persons went up by 10 8,000 year-on-year, marking 13 consecutive months of six-figure increases. However, the pace of increase slowed compared to the annual increase in 2025 (193,000) and December (168,000).   * Growth/decline in the number of employed persons (year-on-year, ten thousand):   (Jan, 2025) +13.5  (Jul) +17.1  (Aug) +16.6  (Sep) +31.2  (Oct) +19.3  (Nov) +22.5  (Dec) +16.8  (Jan, 2026) +10.8   By industry, employment growth in the services sector moderated, as temporary factors overlapped, including base effects from the previously solid pace of increases, cold weather conditions, and holiday-related calendar effect.   By employment status, the number of regular workers (+195,000 → +192,000) and daily workers (+25,000 → +26,000) rose, while the decline in temporary workers (-7,000→ -97,000) widened.   3.       The youth employment rate continued to fall and the number of economically inactive population (those not in employment or seeking work) climbed from a year earlier.   * Inactive Youth (y-o-y, ten thousand):   (Jan, 2025) 3.0  (Aug) -1.4  (Sep) -3.4  (Oct) -0.9  (Nov) 0.7  (Dec) 0.0  (Jan, 2026) 3.5 4.       The government will continue to strengthen the virtuous cycle between growth and employment so that the expanding recovery momentum translates into quality jobs, while stepping up efforts to support vulnerable segments of the labor market, including youth and regional areas.   The government will swiftly implement the key job-related initiatives under the 2026 Economic Growth Strategy. At the same time, it will formulate tailored measures that take into account the characteristics of job-seeking and inactive youth, including efforts to enhance employability, provide work experience opportunities, and offer recovery support.   Efforts will be made to boost job creation capacity by bolstering the competitiveness of key industries and supporting future growth drivers, including the KRW 30 trillion National Growth Fund and the flagship projects of the Hyper-Innovation Economy. Industrial conditions and employment challenges across regions will also be continuously monitored.   In addition, domestic and external risk factors, including those related to trade, financial markets, and prices, will be closely monitored, and every effort will be made to ensure a timely and thorough response. Please refer to the attached files.