Fitch Holds Korea’s Credit Rating Steady in 2025: Impeachment Fallout and Election Risks Ahead

1. Fitch Maintains Korea’s Credit Rating Amid Yoon’s Impeachment Fallout

In February 2025, global credit rating agency Fitch reaffirmed South Korea’s sovereign credit rating at "AA- Stable," a decision that hinged on the anticipated impeachment of former President Yoon Suk Yeol. On April 4, 2025, South Korea’s Constitutional Court unanimously upheld Yoon’s impeachment, a move Fitch later praised as a step toward reducing political uncertainty. In a statement released on April 10, Fitch noted, "The court’s ruling eliminated a key political risk factor we factored into our February assessment." This aligned with predictions from major investment banks like JP Morgan, which foresaw Yoon’s impeachment followed by a Q2 election, and Citi, which projected a late May or early June presidential vote. The decision calmed markets and bolstered confidence in Korea’s political stability. However, Fitch cautioned that while the impeachment resolved short-term chaos, the upcoming June 3 presidential election could introduce fresh uncertainties, potentially affecting the "Fitch credit rating Korea 2025" outlook.

2. Presidential Election Looms: Fiscal Policy Risks on the Horizon

With Yoon Suk Yeol’s impeachment now history, attention has shifted to the snap presidential election scheduled for June 3, 2025, mandated by South Korea’s Constitution. Fitch expressed concerns that the election’s outcome could reshape fiscal, economic, and diplomatic policies, posing risks to Korea’s credit standing. The agency highlighted the opposition Democratic Party’s potential rise, warning that a victory could lead to looser fiscal policies compared to the current administration. South Korea’s national debt soared to 1,175.2 trillion won ($870 billion) in 2024, up 48.6 trillion won from the previous year, while the fiscal deficit hit -4.1% of GDP. "Post-COVID debt growth and persistent deficits could pressure Korea’s credit rating over the medium term," Fitch warned. As the "Korea presidential election impact" looms, the government faces mounting pressure to balance fiscal discipline with voter-friendly promises, a tightrope walk that could sway investor confidence and Fitch’s future evaluations.

3. Economic Outlook Hinges on Election Results and Fiscal Health

South Korea’s political landscape is at a crossroads as the June 2025 election approaches, pitting the Democratic Party, led by Lee Jae-myung, against a fractured ruling People’s Power Party featuring contenders like Oh Se-hoon and Han Dong-hoon. Fitch predicts that the winner’s policy agenda will significantly influence economic growth, fiscal stability, and even foreign relations. Despite the "Yoon Suk Yeol impeachment" stabilizing the political scene temporarily, long-term challenges remain. South Korea’s robust export performance and external resilience have supported its "AA- Stable" rating, but unchecked debt and post-election policy shifts could undermine this. Analysts, including those cited by BBC, view the election as a litmus test for Korea’s governance and public sentiment. For now, Fitch’s outlook remains steady, but the interplay of electoral outcomes and fiscal management will determine whether South Korea can maintain its standing in global markets through 2025 and beyond.

# Fitch credit rating Korea 2025

# Yoon Suk Yeol impeachment

# Korea presidential election impact