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.
