Fitch Reaffirms South Korea at AA- as Growth Outlook Eases, Debt Set to Climb

Overview

• The AA- sovereign rating carries a stable outlook and remains at the fourth-highest level that South Korea has held since a 2012 upgrade.
• Fitch projects real GDP growth of 2.0% this year, with consumption expected to lead the expansion.
• The agency cut its estimate of Korea’s potential growth to 1.9% from 2.1%, pointing to weaker medium-term prospects.
• General government debt is forecast to reach 50.6% of GDP in 2026, and sustained increases without higher potential growth could create rating pressure.
• Fitch highlights structural challenges from an aging population and notes persistent geopolitical risks related to North Korea.