S. Korea's economic fundamentals remain solid: Moody's

A senior official of global rating agency Moody's Investors Service has said that the overall fundamentals of the South Korean economy are solid, the finance ministry said Friday.

Moody's managing director of sovereign risk, Yves Lemay, made the comment in a meeting with South Korea's Vice Finance Minister Kim Yong-beom in London after Kim asked Moody's to take into account South Korea's policies in evaluating its rating on Seoul.

Lemay said geopolitical risks constrained South Korea's rating, though the risks were down from the past, according to the finance ministry.

On Wednesday, North Korea test-fired a new type of submarine-launched ballistic missile, raising fresh tensions just days ahead of crucial talks with the United States on ending Pyongyang's nuclear program.

The talks will mark a resumption of the denuclearization process, which has been stalled since February's summit between US President Donald Trump and North Korean leader Kim Jong-un in Vietnam.

In July, Moody's Investors Service maintained its rating on South Korea at "Aa2" with a stable rating outlook.

Moody's rating for Asia's fourth largest economy has been at the third-highest level on the company's table since 2015, when the rating agency upgraded it from Aa3.

Lemay also gave a positive assessment of South Korea's expansionary fiscal policy to cope with global downside risks.

In August, South Korea proposed a record 513.5 trillion-won ($423.7 billion) budget for 2020 to boost its slowing economy.

The expansionary budget -- which needs parliamentary approval -- represents a 9.3 percent hike from 2019 and marks the second straight year that the budget proposal has risen by more than 9 percent.

Separately, Kim held a roundtable meeting in London with about 30 foreign investors from asset management companies and investment banks in a move to explain South Korea's economic conditions and address their concerns.

Kim told the participants that South Korea has strong resilience to external shocks and is fully ready to deal with downside risks with its fiscal and monetary policy.

The Bank of Korea kept its key interest rate unchanged at 1.5 percent in its August meeting, about a month after it slashed the key rate by a quarter percentage point in its first rate cut in three years.

The South Korean central bank is set to decide on Oct. 16 whether to cut the key interest rate again.

Kim also said there is no concern about deflation in South Korea, noting a drop in headline inflation for the first time in September is temporary due to a fall in prices of agricultural products, stabilizing prices of petroleum products as well as welfare policy.

South Korea's consumer prices fell 0.4 percent in September from a year earlier, the first on-year drop in inflation since Statistics Korea began compiling related data in 1965. (Yonhap)