Ratings agency S&P has confirmed South Korea’s ‘AA/A-1+’ credit rating, saying it doesn’t believe a conflict with North Korea is on the cards in the near future.
The group said that although “geopolitical tensions have risen of late in the Korean peninsula, we believe a direct armed conflict is unlikely.”
It confirmed that it views the likelihood of the North Korean regime provoking a major armed conflict on the peninsula to be low, based on their opinion that such an event would very likely destabilise North Korea politically and “bring no benefit to the country.”
However, it did warn that the risk of an unintended military conflict has risen from a low level:
“After ratcheting up tensions with little to show for it, the regime could underestimate the risks of a more dramatic provocation in the hope of winning some concessions. On the other side, the U.S. may be less patient in responding to North Korean provocations than before, now that it views the country as being close to achieving inter-continental nuclear strike capability. In this situation, a miscalculation by either side of this standoff could spark a direct military conflict.”
S&P continued to say that it was “affirming our ‘AA’ long-term and ‘A-1+’ short-term sovereign credit ratings on Korea.”
“The stable outlook reflects our expectations that geopolitical risks in the Korean peninsula will not escalate over the next two years beyond what we observed since the last leadership transition in [North Korea] in 2011.”
