SEOUL, Feb. 12 (Xinhua) -- Global credit rating company Fitch on Wednesday affirmed South Korea's sovereign credit rating at "AA-" with a "stable" outlook.
Fitch said in a statement that the sovereign rating reflected South Korea's robust external finances, steady macro-economic performance, and a record of sound fiscal management against geopolitical risks and mid-term structural challenges from aging demographics and low productivity.
It noted that there has been a considerable shift to a more expansionary fiscal approach in the medium term under the current South Korean government, forecasting that the country's GDP growth would strengthen to 2.3 percent in 2020 from 2.0 percent in 2019.
Fitch expected the Bank of Korea (BOK) to lower its policy rate by 25 basis points this year to offset downside risks to the economic outlook.
The BOK has left the benchmark interest rate at a record low of 1.25 percent since October last year. The rate was cut from 1.75 percent to 1.50 percent last July.
Fitch said South Korea's strong external finances, underpinned by a large net external creditor position and sustained current account surpluses since 1998, provide a buffer to global financial market volatility.
However, high household debt increases the South Korean economy's vulnerability to shocks and weighs on mid-term consumption prospects, it noted.