Acting President and Deputy Prime Minister Choi Sang-mok met with the annual consultation team from the global credit rating agency Standard & Poor’s (S&P) on March 14^th at the Government Complex-Seoul. During the meeting, they discussed the current economic situation in Korea and key policy directions, reaffirming strong confidence in the Korean economy.

^* S&P Annual Consultation Team:    KimEng Tan, Senior Director, Asia-Pacific Sovereign Ratings at S&P

                                                              Andrew Wood, Director, Asia-Pacific Sovereign Ratings at S&P

                                                              Daehyun Kim, Director, Financial Services Ratings, Korea at S&P

Acting President Choi emphasized that the Korean economy is working stably based on a solid national system. He also introduced the recently passed Amendment to the Act on Restriction on Special Cases Concerning Taxation (also known as the K-Chips Act)^* and the 50 trillion KRW “High-Tech Strategic Industry Fund” announced on March 5^th. He stated that the government is actively working to maintain the global competitive edge of Korea’s semiconductor industry and secure future growth engines such as artificial intelligence (AI), biotechnology, and robotics.

^* The tax credit rate for investments in semiconductors, which is the national strategic technology, has been increased by 5%p. 

    (Large enterprises and middle market enterprises: 15% → 20%,  Small and medium-sized enterprises: 25% → 30%)

In addition, Acting President Choi mentioned that the Korean government is making every effort to turn the changes in the global trade environment caused by the U.S. Trump administration’s tariff measures into opportunities for the Korean economy. He also noted that both sides are maintaining close communication to seek mutually beneficial, win-win strategies for both countries, such as exploring cooperative projects in areas of high interest to the U.S., including shipbuilding and energy.

In response to S&P’s inquiry about Korea’s polarization, Acting President Choi highlighted that the government has been focusing its policy efforts on strengthening the social safety net and implementing strong expenditure structural reform, which has led to continuous improvements in income distribution indicators. However, acknowledging there has been little progress in perceived inequality due to deepening asset inequality and declining opportunities for social mobility, he explained that the government is pursuing structural solutions to enhance social mobility, such as increasing economic participation for young people, expanding educational opportunities, enhancing asset formation, and carrying out labor and pension reforms, instead of resolving these issues through fiscal spending.

^*  Income quintile ratio (Survey of Household Finances and Living Conditions, times): (2011) 8.25 → (2023) 5.72

Middle-class proportion (Survey of Household Finances and Living Conditions, %): (2011) 55.1 → (2023) 63.0

^** Net asset Gini coefficient (Survey of Household Finances and Living Conditions):  (2016) 0.586 (2018) 0.588 (2020) 0.602 (2022) 0.606 (2024) 0.612

The S&P delegation underlined that all policies related to a country’s economic growth and fiscal soundness can only be effectively implemented based on a solid and stable political foundation. They pointed out that despite Korea’s political uncertainty in the aftermath of the martial law declaration at the end of last year, Korea’s national system has recovered quickly over the past three months; at this point in time, its impact on Korea’s credit rating would be limited.

The S&P delegation assessed that Korea’s fiscal soundness remains robust; regarding external stability, Korea’s high credit rating is primarily supported by its ample foreign exchange reserves, net external assets, and steady current account surpluses.

Including today’s courtesy visit to Acting President Choi, the S&P annual consultation team conducted its annual consultation on Korea from March 10^th to March 14^th, engaging with various institutions, including the Ministry of Economy and Finance, the Ministry of Science and ICT, the Ministry of Trade, Industry and Energy, the Ministry of Health and Welfare, the Ministry of Land, Infrastructure and Transport, the Financial Services Commission, the Bank of Korea, the Korea Development Institute (KDI), and the Korea Institute for International Economic Policy (KIEP).

Please refer to the attached files.