(LEAD) 'Irreversible improvements' on N.K. issues needed to push up Seoul's rating: Moody's

(ATTN: ADDS more remarks, background in last 4 paras)

SEOUL, June 20 (Yonhap) -- Recent peace moves involving North Korea are not enough to ease geopolitical risks on the Korean Peninsula and to push up South Korea's sovereign rating, an analyst at Moody's Investors Service said Wednesday.

"What we saw last week in the Trump-Kim Jong-un meeting in Singapore only partially restores the level of geopolitical risks," Christian de Guzman, Vice President of the rating agency's Sovereign Risk Group, said in a press briefing in Seoul.

Stressing that the primary constraint on South Korea's sovereign rating is the issue regarding its communist neighbor, the expert said "material and irreversible improvements" are needed to take the issue as a reason to change Seoul's credit level.

On June 12, U.S. President Donald Trump and North Korean leader Kim Jong-un held a historic summit, vowing to strive for the denuclearization of the Korean Peninsula and the improvement of their relations. The talks are the culmination of Pyongyang's diplomatic engagement with the international community and South Korea since the beginning of this year.

Pointing out that North Korea's agreements with Seoul and Washington do "not feature a well-defined path towards achieving those shared goals," however, Moody's on Monday announced it is maintaining its rating on South Korea at 'Aa2,' with its outlook for the country remaining stable.

"There continues to be a lot of uncertainty with regard to the peace process going forward ... There is not enough predictability even with regard to the U.S. policy," the analyst added.

As for the escalation of trade tensions between the U.S. and China, Guzman said the current level of conflict would not have "material impacts on the Chinese growth and its demand for exports."

But more serious retaliatory measures "will truly affect China and other trading partners," and South Korea "will be one of the most impacted countries in the region" factoring in the global supply chain, according to the analyst.

Following his decision last week to impose tariffs on Chinese goods worth over US$50 billion, Trump on Monday threatened to impose additional tariffs if China refuses to "change its practices."

Asked about any impacts of the Seoul government's labor-friendly policy measures on the country's sovereign rating, the expert said it is "too early to say" if such measures will lead to overall economic growth.

graceoh@yna.co.kr
(END)