Fitch upgrades South Korea credit rating

People wait in long queues to buy train tickets for their hometown visit during the upcoming nation’s biggest traditional holiday, Chusok, the Korean version of Thanksgiving Day that starts September 29, at the Seoul Railway Station in Seoul on Sept. 4, 2012. Ratings agency Fitch on Thursday, Sept. 6, 2012, upgraded South Korea’s credit rating, citing a strong macroeconomic policy framework and continued economic and financial stability. AP PHOTO/LEE JIN-MAN

SEOUL—Ratings agency Fitch on Thursday upgraded South Korea’s credit rating, citing a strong macroeconomic policy framework and continued economic and financial stability.

South Korea’s long-term foreign-currency issuer default rating was raised to AA- from A+, Fitch said, adding the outlook is stable.

The agency said it took into account strong structural fundamentals including an income level and social and political stability that “are not out of line with the AA rating range,” although risks associated with North Korea remain relevant.

It said South Korea should be able to avoid falling into recession despite a significant slowdown in external demand, with its real GDP forecast to grow 2.5 percent this year and 3.6 percent in 2013.

The country’s labor market has remained resilient, while the authorities have so far refrained from significantly loosening fiscal policy, Fitch said.

South Korea’s external finances, which proved to be a source of vulnerability at the start of the global financial crisis in 2008, have continued to improve, it said.

“Equally important, the evidence to date shows that Korea has not had any difficulty in managing the heavy external debt service payment schedule it is facing in 2012-13,” the agency said.