Impact of Trump Tariffs and Martial Law on South Korea's Credit Rating
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Synopsis
Global credit agencies have determined that the tariffs imposed by Trump's administration and the political instability due to Yoon Suk Yeol's martial law will not impact South Korea's sovereign credit rating, according to the finance ministry. This assessment was made during discussions with key financial institutions in Hong Kong and Singapore.
Key Takeaways
- Global credit assessors see no impact on South Korea's credit rating.
- Discussions held with major credit rating agencies in Hong Kong and Singapore.
- Political uncertainties have been resolved by constitutional means.
- Yoon's martial law declaration led to political and market turmoil.
- Fitch reaffirmed South Korea's sovereign rating at 'AA-' with a stable outlook.
Seoul, Feb 16 (NationPress) Worldwide credit assessors have indicated that the extensive tariffs imposed by U.S. President Donald Trump's administration, along with the political upheaval triggered by the now-suspended President Yoon Suk Yeol's martial law, are unlikely to influence South Korea's sovereign credit rating, as stated by the finance ministry of Seoul on Sunday.
This conclusion emerged from discussions led by Choi Jong-ku, South Korea's ambassador-at-large for international financial cooperation, with representatives from Moody's Investors Service, Fitch Ratings, and Standard & Poor's Global Ratings in Hong Kong and Singapore last week, according to the Ministry of Economy and Finance.
During these discussions, Choi elaborated on the prevailing domestic political landscape and emphasized that the political uncertainties have been addressed in line with the nation’s constitutional and legal frameworks, as reported by Yonhap news agency.
The ministry's announcement stated, "Global agencies have indicated that South Korea stands apart from other countries that faced a downgrade in their sovereign ratings due to political deadlocks and the resultant financial troubles."
Furthermore, it noted, "While the U.S.'s elevated tariffs and requests for increased defense contributions may have some impact on the Korean economy, they will not necessitate any adjustments to the sovereign rating."
The declaration of martial law by Yoon on December 3 led to significant political unrest, influencing both the foreign exchange and stock markets. The National Assembly subsequently voted to impeach Yoon while awaiting a ruling from the Constitutional Court.
In a bid to reassure investors about the nation's robust economic and financial foundations despite the political turmoil, Choi conducted an investor relations session in Singapore on Thursday.
This session saw participation from senior officials of major investment firms, including BlackRock and Pimco.
Besides, the ambassador engaged in discussions with a senior executive from HSBC Holdings last week, with plans to meet more investors and global financial institution officials in New York and London in the upcoming weeks, as per the ministry’s statement.
Earlier this month, Fitch confirmed that it has maintained South Korea's sovereign rating at "AA-" with a stable outlook.
