Global rating agency Moody's Investors Service has warned that delays in implementing structural reforms will weaken South Korea’s economic growth potential.
 
In its Moody’s Credit Outlook report issued on Monday, the agency highlighted the ruling Saenuri Party’s loss of its majority in parliament in last week's general elections.

Moody's said that is likely that the new parliamentary layout would make it more difficult for President Park Geun-hye to pass proposed structural reforms, calling the election result "credit negative."

The report added that the weakening prospects for structural reform implementation come at a time of persistent external headwinds in the form of slowing growth in China and weak domestic consumer confidence.
 
The report said that the “Saenuri could still achieve the largest number of seats if seven former party members who contested the election as independents return to the party." However, it was quick to add that it is less than the three-fifths majority that the ruling party had wished for.

Moody's ended its assessment with a forecast that South Korea will post economic growth of two-and-a-half percent this year and an average of two-point-nine percent until 2020.

Last Friday, another global credit rating agency, Fitch Ratings, said that the South Korean government will find it more difficult to implement key structural reforms to boost long-term productivity due to the ruling party’s loss in the general elections. The agency said South Korea's long-term growth prospects face challenges from a series of structural factors.