The global ratings agency Moody's Investors Service forecasts that next year, the South Korean economy will fare slightly better by posting two-point-one percent growth but warned that credit conditions will worsen for Korean firms.

Christian de Guzman, senior vice president of the Sovereign Risk Group at Moody's, held a media briefing in Seoul on Tuesday.

The senior vice president said South Korea's economic, institutional and fiscal strength continued to remain very strong and noted that government debt was expected to increase to around 42 percent of gross domestic product due to a large fiscal expansion proposed by the government.

Guzman added that Korea's trade tension with Japan may have introduced some level of new downside risks but that there is little evidence of disruptive effects on the local economy. 

However, the agency voiced a more negative outlook regarding domestic firms.

Chris Park, an associate managing director of corporate finance group at Moody's, said that of the 24 South Korean companies rated by Moody's, 14 now have negative outlooks.

Park said the overall profitability of export-dependent companies deteriorated in 2019 due to the global economic slowdown.

He added that the downturn in global trade will continue to negatively impact local industries such as the semiconductor and chemical sectors.