Global agency Moody’s said yesterday it had upgraded its rating on South Korea’s government bonds because of the country’s “exceptional resilience” to the global economic crisis.
Moody’s Investors Service said in a statement it had changed the ratings to A1 from A2 and maintained a stable outlook, despite concern over a potential threat posed by North Korea.
“The change has been prompted by [South] Korea’s demonstration of an exceptional level of economic resilience to the global crisis, while containing the government’s budget deficit,” senior vice president Tom Byrne said.
Moody’s said Asia’s fourth-largest economy was responding rapidly to the improving global outlook and the government had put policy measures in place that should help sustain growth over time.
It also moved the ceiling applied to foreign currency bonds issued in South Korea to Aa2 from Aa3 and changed the ceiling applied to foreign currency bank deposits to A1 from A2.
Byrne said in the statement the country managed growth of 0.2 percent last year “and is likely to stage a robust recovery with a 5 percent growth rate in 2010, even as fiscal stimulus measures are wound down.”
The South Korean finance ministry also forecasts 5 percent growth this year, while the central bank raised its prediction to 5.2 percent on Monday.
Moody’s said government debt remained moderate despite the global crisis and last year’s fiscal deficit was relatively small.
FAVORABLE POSITION
“Such achievements place [South] Korea in a favorable position when compared with most other A-rated countries,” Moody’s said.
The agency said the government was on course to wipe out its deficit in the next two to three years. Policymakers were also tackling vulnerabilities, such as the banking system’s partial reliance on foreign funding and the sector was sound overall.
Foreign exchange reserves had risen to a record US$270 billion and the current account was likely to stay in surplus this year, it added.
Moody’s noted South Korea’s challenges over the next 10 to 15 years because of an ageing population, but said assets in the national pension system would keep growing robustly.
It cited two concerns — the rise in the debt of the South’s state-owned corporations and North Korea’s potential threat.
It noted that six-party nuclear disarmament talks remain deadlocked “and the possibilities of military provocations which threaten regional peace are always present.”
Those fears, however, were counterbalanced by South Korea’s strong alliance with the US and a shared interest among regional powers — notably China — in stability on the peninsula. Moody’s said a positive transformation of the Pyongyang regime would mean the future cost of engaging or stabilizing the North would be manageable.
It said the prospect of “a catastrophic collapse” north of the border could not be ruled out, although the effect of this was difficult to quantify.
Super Typhoon Kong-rey is the largest cyclone to impact Taiwan in 27 years, the Central Weather Administration (CWA) said today. Kong-rey’s radius of maximum wind (RMW) — the distance between the center of a cyclone and its band of strongest winds — has expanded to 320km, CWA forecaster Chang Chun-yao (張竣堯) said. The last time a typhoon of comparable strength with an RMW larger than 300km made landfall in Taiwan was Typhoon Herb in 1996, he said. Herb made landfall between Keelung and Suao (蘇澳) in Yilan County with an RMW of 350km, Chang said. The weather station in Alishan (阿里山) recorded 1.09m of
STORM’S PATH: Kong-Rey could be the first typhoon to make landfall in Taiwan in November since Gilda in 1967. Taitung-Green Island ferry services have been halted Tropical Storm Kong-rey is forecast to strengthen into a typhoon early today and could make landfall in Taitung County between late Thursday and early Friday, the Central Weather Administration (CWA) said yesterday. As of 2pm yesterday, Kong-Rey was 1,030km east-southeast of Oluanpi (鵝鑾鼻), the nation’s southernmost point, and was moving west at 7kph. The tropical storm was packing maximum sustained winds of 101kph, with gusts of up to 126 kph, CWA data showed. After landing in Taitung, the eye of the storm is forecast to move into the Taiwan Strait through central Taiwan on Friday morning, the agency said. With the storm moving
NO WORK, CLASS: President William Lai urged people in the eastern, southern and northern parts of the country to be on alert, with Typhoon Kong-rey approaching Typhoon Kong-rey is expected to make landfall on Taiwan’s east coast today, with work and classes canceled nationwide. Packing gusts of nearly 300kph, the storm yesterday intensified into a typhoon and was expected to gain even more strength before hitting Taitung County, the US Navy’s Joint Typhoon Warning Center said. The storm is forecast to cross Taiwan’s south, enter the Taiwan Strait and head toward China, the Central Weather Administration (CWA) said. The CWA labeled the storm a “strong typhoon,” the most powerful on its scale. Up to 1.2m of rainfall was expected in mountainous areas of eastern Taiwan and destructive winds are likely
The Central Weather Administration (CWA) yesterday at 5:30pm issued a sea warning for Typhoon Kong-rey as the storm drew closer to the east coast. As of 8pm yesterday, the storm was 670km southeast of Oluanpi (鵝鑾鼻) and traveling northwest at 12kph to 16kph. It was packing maximum sustained winds of 162kph and gusts of up to 198kph, the CWA said. A land warning might be issued this morning for the storm, which is expected to have the strongest impact on Taiwan from tonight to early Friday morning, the agency said. Orchid Island (Lanyu, 蘭嶼) and Green Island (綠島) canceled classes and work
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