Korea¡¯s sovereign credit rating to rise

Merrill Lynch forecast that Korea¡¯s sovereign credit rating would be upgraded in this year¡¯s second half. Noting that the nation¡¯s overall credit conditions are substantially improving, the U.S.-based brokerage stressed that the positive outlook on Korea¡¯s ratings recently drawn by Standard & Poor¡¯s was very appropriate.

Merrill Lynch, however, appraised that the opposition from some parts against restructuring, which was witnessed in the recent banking walkout, coupled with burdensome costs to be spent on inter-Korean economic cooperation and unification of the two Koreas, are still weighing down the nation. The U.S. securities firm also projected that despite recently slowed economic growth and stabilizing consumer prices, the Bank of Korea should raise the interest rates by 0.5 percentage points during the second half, in a move to narrow the gap between the long-term and short-term rates, which currently hit 4 percentage points.