[Photo by Namgung jin-woong = timeid@ajunews.com]
There won't be a significant negative impact on South Korea's sovereign credit rating by the impeachment of President Park Geun-hye, global credit appraiser Fitch Ratings said Wednesday.
"Political uncertainty is likely to hold back economic activity -- by delaying investment and weighing on consumer confidence -- until a new president is elected. However, we do not expect political disruption to severely affect economic activity in the medium term," Fitch said in a press release.
On Friday, the National Assembly passed a motion to impeach President Park over the high-profile corruption allegation in which her long-time confidante meddled in state affairs and took profits. The Constitutional Court has up to 180 days whether to adopt the motion, or reinstate Park.
The credit agency said a verdict would be reached much sooner, adding that Seoul's "political institutions appear strong enough to ensure an orderly and constitutional resolution without a significant negative impact on the sovereign credit profile."
The country's rating has remained at AA- since March.
Asia's No. 4 economy is expected to grow 3 percent in 2016 and 2.5 in 2017, which is over the 1.6 percent median for other AA- rated countries, Fitch said.
Fitch, meanwhile, said the current political crisis "highlighted governance weaknesses, particularly those that stem from close ties between the country's large corporations and its government."
There have been mounting cries that the scandal is attributable to excessive ties between the government and chaebol, or family-controlled conglomerates. There are allegations of behind-the-scenes deals between the confidante Choi Soon-sil and chaebol, and that Park pressured them to donate to two nonprofit foundations.
"It is possible that the strong public reaction to this scandal might eventually lead to weaker links between the state and the corporate sector, and a structural improvement in governance," Fitch said.
(Yonhap)
reporter
Park Sae-jin
swatchsjp@ajunews.com
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