Although geopolitical tensions have risen of late in the Korean peninsula, we believe a direct armed conflict is unlikely. Korea's record of steady economic growth has generated a prosperous economy, a high degree of fiscal and monetary flexibility, and a solid external position. The sovereign's high geopolitical risks and contingent liabilities temper these strengths. We are affirming our 'AA' long-term and 'A-1+' short-term sovereign credit ratings on Korea. The stable outlook reflects our expectations that geopolitical risks in the Korean peninsula will not escalate over the next two years beyond what we observed since the last leadership transition in DPRK in 2011. On Aug. 18, 2017, S&P Global Ratings affirmed its 'AA' long-term sovereign credit rating on the Republic of
