The economy is one of the top priorities for South Korea's new President Moon Jae-in. 

In the past decade, the country has accumulated a large fortune, but it's only concentrated in a handful of conglomerates, meaning the majority of South Koreans don't benefit from this economic growth. 

Now, there are calls for change, and Moon Jae-in has promised to spend 4.2 trillion won (nearly 3.7 billion US dollars) annually to create over 800,000 jobs. Other pledges include housing, education and environmental reform.

Moody's expects a smooth political transition in the country, and maintains a view of low probability of military conflict with the DPRK. 

But the agency also said geopolitical tensions continue to pose a risk and are a key constraint on the country's credit profile. Moody's said South Korea has a strong government balance sheet, but the country faces several challenges including labor market reforms and corporate restructuring.