The country’s sovereign rating surged the most among the members of the Organization for Economic Cooperation and Development in the past five years, said a report on Sunday.
According to data by the Korea Center for International Finance, Korea’s credit rating went up by two notches to “Aa3” between the end of 2007 and October of this year. “Aa3” is the fourth-highest level designated by Moody’s Investors Service.
The report also said that Fitch Ratings lifted South Korea’s rating to “AA-” from “A+,” and Standard & Poors also offered an upgrade to “A+” from “A” during the same period.
The figures show that Korea has achieved a major improvement in credit ratings relative to the 34 OECD member countries over the last five years.
The nation’s fiscal soundness had played a vital role in the back-to-back rating upgrades despite the sluggish world economy, said the report.
As an exemplary case, another report released by the International Monetary Fund last month showed that the debt-to-growth ratio stood at 33.5 percent this year, whereas the average for the financially unstable nations was about 200 percent. The average for the Group of 7 nations was also set at 125.1 percent.
“Since Korea suffered from the 1997 Asian financial crisis, we’ve kept tabs on capital in and outflows, foreign exchange volatility and managed the foreign reserves,” Lee Hee-jeong, an economist at Hyundai Economic Research Institute, told Yonhap News.
The credit index gauging risk-hedging costs for South Korea also recently fell to a level lower than that of Japan and China, reflecting fiscal stability for Asia’s fourth-largest economy, according to the report by the KCIF.
During the same period, the economically advanced OECD members ― so-called “triple A” nations such as the U.S. and Japan ― lost their top status amid a protracted global downturn, and 11 other “triple A” members, including Germany, did not see any status changes.
Five of the 15 top-notch countries saw their ratings downgraded over the period, with the U.S. losing its “AAA” rating by Standard & Poor’s to “AA+” in August, it said.
On the other hand, Turkey’s credit rating edged up up four notches over the same term although its rating is lower than Korea’s, and four other countries ― which include Chile, Estonia and Israel ― trailed behind with three-time upgrades, said the KCIF.
By Cho Ji-hyun (email@example.com