(LEAD) Fitch upgrades outlook for Korea's sovereign rating to 'stable'

(ATTN: RECASTS lead; ADDS details with Fitch's statement and government response
from 3rd para)
By Koh Byung-joon
SEOUL, Sept. 2 (Yonhap) --- Global credit appraiser Fitch Ratings said Wednesday
it has upgraded its outlook for South Korea's sovereign rating to "stable," amid
growing signs the economic downturn is easing and that market confidence is
stabilizing.

The upgrade comes after Fitch lowered its outlook for South Korea's rating from
"stable" to "negative" in November last year, reflecting the impact of the global
financial turbulence on its economy.
"South Korea's sovereign credit fundamentals have regained ground against the 'A'
peer group, warranting an outlook revision to stable," Fitch said in a statement.
The latest decision was based on the conclusion of a three-day visit by a Fitch
delegation in July to assess the country's economic and financial conditions.
Fitch, however, kept its sovereign rating for South Korea at "A plus," the
fifth-highest investment grade, since it upgraded the rating by one notch from
"A" in October 2005. It is still a step lower than the "AA minus" that the
country held just before the Asian financial crisis in the late 1990s.
The latest upgrade could augment optimism in South Korea that the worst of the
economic downturn might be nearing an end, with diverse market indicators
pointing to a recovery.
The collapse of U.S. investment giant Lehman Brothers last September sent South
Korea's financial system and export-driven economy into chaos, stirring rumors it
migth face a repeat of the 1997-98 financial meltdown.
South Korea's economy, however, is recovering at the fastest pace among major
countries, with its gross domestic product expanding an better-than-expected 2.3
percent in the second quarter of this year. In the last quarter of 2008, the
country's GDP plunged 5.1 percent.
The Seoul government credited the upgrade to its active efforts to tide over the
financial and economic crises as well as other improving macroeconomic signals
and thawing foreign liquidity.
"Fitch's move to raise the Korean outlook can be understood as a sign that it
acknowledges our efforts as successful to get over the global economic crisis,
prompted by the Lehman collapse last September," the finance ministry said in a
statement.
kokobj@yna.co.kr
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