SEOUL, March 13 (Yonhap) -- Global credit appraiser Fitch Ratings said Monday it has reaffirmed South Korea's sovereign rating at "AA-" with a stable outlook, while suggesting an economic growth of 1.2 percent this year.
Fitch's rating for South Korea has been AA-, the fourth-highest level on the agency's table, since September 2012.
"Korea's rating balances robust external finances, resilient macroeconomic performance and a dynamic export sector against geopolitical risks related to North Korea, lagging governance indicators and structural challenges from an ageing population," the credit appraiser said in a release.
"Economic growth is likely to decelerate in the near term, but credit and policy buffers remain sufficient to manage these pressures," it added.
Fitch said South Korea's economy is expected to grow 1.2 percent on-year in 2023, compared with a 2.6-percent growth tallied in 2022, as "the economy faces headwinds from subdued global growth, high interest rates and still elevated inflation."
Touching on the country's key rates, Fitch said it expects the country's central bank to hold the currently level of 3.5 percent through 2023.
"Domestic inflationary pressure is easing, but external considerations around the U.S. Fed's rate path could prompt additional tightening in the near term," the credit appraiser said.
The Bank of Korea kept the benchmark interest rate unchanged at 3.5 percent for the first time in 10 months in February. The central bank previously had seven straight rate hikes since April last year to tame inflation.
The credit appraiser added South Korea's inflation is anticipated to reach 2 percent by the end of this year, pointing out the BOK may also cut the key rate by 0.5 percentage point in 2024.
South Korea's exports, meanwhile, are expected to remain sluggish in the first half of 2023 due to the weak performances of semiconductors, it added.
Source: Yonhap News Agency