Bangkok--11 Apr--Standard & Poor's The outcome of South Korea's general elections has boosted the president's power to push through policies to get the economy firing on all cylinders, said Standard & Poor's Ratings Services today. President Lee Myung-bak's Grand National Party (GNP) won 153 seats in the 299-seat National Assembly in the elections on April 9, 2008. The main opposition, United Democratic Party, secured only 81 seats. Allies of former chairperson of GNP, Park Geun-hye, won more than 20 seats; they left GNP after Ms. Park failed to win the party's presidential candidacy last year. Including about 30 who were elected on the GNP's platform, there will be more than 50 new legislators who support Ms. Park. The conservative Liberal Forward Party, started by former GNP leader Lee Hoi-chang in 2007, took 18 seats. "The relatively strong showing of the Pro-Park group within and outside of GNP would give more power and leverage to Ms. Park for future formation of government policies," said Standard & Poor's credit analyst, Takahira Ogawa. "About 200 out of the 299 legislators in the National Assembly are in conservative camps," Mr. Ogawa said. "As a result, policies such as the government plan for the privatization of state-owned companies such as Korea Development Bank (foreign currency A/Stable/A-1; local currency --/--/A-1) could be accelerated. The controversial plan for the construction of the grand canal could also become more realistic." Nevertheless, the president's ambitious economic policy--targeting 6% growth in 2008 and 7% in the medium term--for Asia's fourth-largest economy could be a double-edged sword. If the government pursues higher growth at the expense of reforms in capacity and efficiency of the economic system, the boom and bust in the past could be repeated. If significant steps to improve corporate governance, disclosures, protection of minority shareholders' rights are not taken along with the deregulations on activities of the "chaebol," the Korean conglomerates, there could be more harm than good in the long run. "Just as importantly, the financial sector's management and financial strength is a factor in maintaining and increasing economic growth," Mr. Ogawa noted. We will continue to monitor the Korean government's initiatives on the above issues. Success in those areas plus transparency and fairness accompanying the deregulations in conglomerates, and financial sector activities based more on market approach with less government intervention will be positive for the sovereign credit rating on Korea (foreign currency A/Stable/A-1; local currency A+/Stable/A-1). "If the government succeeds in dealing with those issues, it will be positive as the country can improve the stability and efficiency of the financial system, and can maintain stable inflation and a reasonable fiscal position, and thus raising its growth potential in the medium term," Mr. Ogawa said. "On the other hand, failing to tackle some of the structural problems and only boosting immediate growth, Korea will remain in the boom and bust economic cycle, which could adversely affect sovereign ratings of Korea." Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of financial market intelligence, including independent credit ratings, indices, risk evaluation, investment research, and data. With approximately 8,500 employees, including wholly owned affiliates, located in 23 countries, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit www.standardandpoors.com.