Moody's: Korea containing risks

In its annual report on Korea, Moody's Investors Service said the country's A3 government bond ratings and positive outlook reflect the government's sound fiscal stance and the containment of risks associated with North Korea.

Because geopolitical risk has been a constraint on South Korea's ratings, actual implementation of North Korea's commitment to denuclearize would reflect a significant reduction in those risks, Moody's said.

Moody's said the ratings also reflect a renewed commitment to trade liberalization to boost potential economic growth, which was demonstrated by the successful conclusion of a Korea-U.S. free trade agreement and the initiation of talks to reach a similar agreement with the European Union. Both pacts require, however, legislative approval on all sides and may face significant obstacles, the agency said.

Korea's economic growth has benefited from post-crisis deregulation and liberalization of foreign investment, particularly in the financial system, the agency said.

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