Fitch on Jan. 30 maintained Korea's sovereign rating at "AA-" with a stable outlook, citing strong private and government consumption. (Yonhap News)

By Lee Jihae

Fitch on Jan. 30 maintained Korea's sovereign rating at "AA-" with a stable outlook, reaffirming its confidence in the nation's economy.

The Ministry of Economy and Finance said Fitch expects the growth of gross domestic product to "recover to 2.0% in 2026, after slowing to 1.0% in 2025, driven mainly by strong private and government consumption."

"Net exports would remain an underlying growth driver, supported by semiconductor exports," the ratings agency added, though citing lingering trade issues with the U.S. such as reciprocal tariffs as risks.

Fitch "revised down its estimate of Korea's potential GDP growth rate to 1.9% from 2.1%, due to declines in the working age population," but added that "the government is ramping up efforts to boost productivity through large investments in AI (artificial intelligence) and high-tech industries, which it hopes will offset rising demographic pressures on growth."

The agency said the easing of political uncertainty since the launch of President Lee Jae Myung's administration last year secured the momentum to advance policy.

On the fiscal side, the fiscal balance was expected to improve 2% this year, down from last year's 2.3%, thanks to higher tax revenues resulting from economic recovery.

The agency also cited favorable external finances, saying, "Korea's robust external finances are underpinned by persistent current account surpluses, reflecting its positive savings-investment balance. This supports a large net external creditor position of 23.3% of GDP."

The KRW depreciated last year due to factors such as capital outflows, it added, but is expected to gradually strengthen this year and the next.

jihlee08@korea.kr