Reunification 'Would Boost Korea's Credit'

      January 10, 2014 11:02

      Global investment banks predict that Korea reunification would benefit the country's credit rating as constant cross-border tensions end.

      The view is shared by Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, Macquarie and Morgan Stanley.

      The Chosun Ilbo asked the six for their outlook for Korea's sovereign credit rating, national brand value and economic health following reunification. With the exception of Morgan Stanley, they forecast the country's sovereign credit rating would rise by more than two notches.

      Morgan Stanley noted that reunification costs would add to the fiscal burden but projected the sovereign credit rating would rise at least one notch over the mid to long-term.

      South Korea's sovereign credit rating according to the Fitch ratings firm stands at AA- at present and would go up to AA+, just one notch below the top rating of AAA and the same as the U.K. and France.

      It would be the fourth-highest credit rating after the U.S., Germany and Singapore and two notches above Japan.

      Yoon Deok-ryong at the Korea Institute for International Economic Policy said, "The North Korea security risk has always been a main reason for demerits in evaluations by international ratings firms, so when that disappears, foreign direct investment, which remains the lowest among OECD member nations, could surge."

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