Global credit rating agency Moody's Investors Service has maintained South Korea's Aa2 rating with a "stable" outlook.

In its latest report on Friday, Moody's said Korea is underpinned by its strong policy effectiveness and highly diversified and competitive economy. An Aa2 sovereign rating is the third-highest on the company's table.

The agency also expects the Korean economy will expand one-point-five percent this year, down one percentage point from its previous report in March. The outlook is the same as those predicted by the Korea Development Institute and the International Monetary Fund and lower than the one-point-six percent growth forecast by the South Korean government and the Bank of Korea.

Moody's said that tighter financial conditions, the housing market downturn and weak labor market can amplify weaker growth, with higher interest rates and fluctuating asset prices presenting risks for vulnerable households.

However for growth in 2024, the agency raised its forecast for Korea from two percent to two-point-four percent.