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(LEAD) N. Korean risks not high enough to change ratings on S. Korea: S&P official

2017/09/14 11:12

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(ATTN: UPDATES with details, minor edits)

SEOUL, Sept. 14 (Yonhap) -- Tensions over a raft of provocations by North Korea are not high enough to adjust ratings on South Korea, a senior official of the global rating agency Standard & Poor's said Thursday.

"As long as there is no actual war outbreak, I think the impact is relatively limited, and that's why we don't change our outlook on the rating of South Korea," Kim Eng Tan, senior director of Asia-Pacific sovereign ratings at S&P, said in a brief interview with Yonhap News Agency.

Last month, S&P reaffirmed its long-term sovereign rating on South Korea at "AA," and maintained its outlook at "stable," despite heightened tensions on the Korean Peninsula over North Korea's missile and nuclear programs.

Last year, S&P upgraded South Korea's sovereign rating to a record high, the third-highest grade in the company's evaluation scheme.

Tan said a stable outlook means that S&P does not expect to downgrade South Korea's rating in one to two years.

He said the rating may be affected in case of an outbreak of a big conflict.

Kim, however, said he doesn't think the South Korean government will allow a war to break out on the peninsula unless it is pushed to very strongly by developments or provocations by North Korea.

"There's always the risk of unexpected developments that may push or force the South Korean government to allow conflicts to happen, but at this point in time, we don't think the risks are that high -- at least not high enough for us to reflect it in our ratings," he said.

Tensions have spiked on the Korean Peninsula in recent months as North Korea has fired intercontinental ballistic missiles and carried out its sixth and most powerful nuclear test.

North Korea has issued a thinly-veiled threat to further strengthen its missile and nuclear weapons programs in response to toughest-ever U.N. sanctions imposed on Pyongyang over its latest nuclear test.

Tan also said South Korea's growth rate is pretty decent, compared with other advanced economies.

He said population aging, together with the household debt problem, may create some pressure for growth in the medium to long term.

In 2015, the number of South Koreans aged over 65 accounted for 12.8 percent of the country's population. The ratio is projected to grow to 28.7 percent by 2035 and 42.5 percent by 2065, according to the statistics office.

A country is classified as an "aged society" if people over 65 make up between 14 and 20 percent of the population.

South Korea's total fertility rate -- the average number of children a woman bears in her lifetime -- stood at 1.25 in 2016, much lower than the replacement level of 2.1 that would keep South Korea's population of 51 million stable.