FACTBOX-Key political risks to watch on the Korean peninsula

SEOUL, March 12 (Reuters) - North Korea again defied the United States, Japan, Russia, the South and the United Nations when it tested a nuclear bomb in February. The test, which Pyongyang said was intended to counter hostility from Washington, also drew condemnation from Beijing, its only major ally.

The test brought a new set of sanctions from Washington and the U.N., effectively scuttled the remote prospect that young leader Kim Jong-un was contemplating reform, however tentative, and instead repeated a sequence of events straight from his father Kim Jong-il's regime.

South of the border, most people were indifferent to or at worst irritated by the nuclear detonation. Top of the list of concerns for South Korea's President Park Geun-hye, who took office on Feb. 25, is a deep slump in growth for its export-driven economy.

The final quarter of 2012 was the seventh consecutive quarter to feature sub-1 percent growth, its longest run of such slow expansion for more than four decades.

SOUTH KOREA RATINGS:

S&P: A+

MOODY'S: Aa3

FITCH: AA-

These are the main political risks to watch:

NORTH KOREA: BACK TO THE OLD ROUTINE?

Kim Jong-un's public appearances last year at a pop concert, on a rollercoaster, and with a wife in Western-style clothes may have raised eyebrows and some hopes that he was ready to depart from the traditional template of provocation and isolation, but February's nuclear test and what followed showed he is very much his father's son.

The U.N. and U.S. imposed new sanctions as punishment for the February test, moves to which the North responded by once again threatening a preemptive nuclear strike against the United States, an act far beyond its technical capability.

Denunciation from the international community carries no persuasive weight in the country which exists far beyond the boundaries of normal diplomacy, while the one nation which does have levers to pull in the North, China, is less likely than ever to take meaningful action.

The U.S. military "pivot" towards Asia, combined with a longstanding fear that a collapsed North would lead to a pro-Washington unified Korea on its border, means Beijing feels it has little choice but to carry on backing the Kim regime with money and trade.

Barring a decisive intervention from outside, which is extremely unlikely, the only threat to Kim's grip on power will come from within.

Serious challenges will only arise if the army and the handful of families who control practically all resources that enter the country feel threatened, and with political reform not even close to appearing on Kim's "military-first" agenda, there is nothing to suggest this is on the horizon.

What to watch:

- Any sign that new sanctions against North Korea are biting.

- More aggressive lines taken in Washington, Tokyo and Seoul. Signs, however improbable, that Beijing is losing patience with Kim Jong-un.

SOUTH KOREA: CHALLENGES FOR PRESIDENT PARK

President Park Geun-hye, the daughter of South Korea's former military ruler Park Chung-hee, won December elections to become the country's first female leader, but takes over an economy whose years of rapid growth seem unlikely to be repeated soon, and a society increasingly haunted by inequality and fears of unemployment.

The euro zone's fiscal crisis and slowing growth elsewhere hit South Korea's export-reliant economy in 2012, prompting the central bank to twice cut interest rates, while the government took fiscal stimulus steps worth around ${esc.dollar}12 trillion.

The finance ministry has set its first growth target for 2013 at 3 percent while the Bank of Korea in January forecast a 2.8 percent gain for 2013 gross domestic product. The median forecast from the latest Reuters survey in January was for a 3.0 percent rise for the year.

A common complaint among South Koreans is the behaviour of big business groups known as 'chaebol', which include the country's best known firms like Samsung and Hyundai. Often accused of corrupt practices and exerting undue influence on lawmaking, these family-owned firms control assets worth more than half of country's GDP.

Park's left-wing challenger had threatened to end the web of shareholdings that permit family control of such huge enterprises, but she is unlikely to limit their scope.

The central bank held interest rates steady for a fourth straight month at 2.75 percent, but warned that Japan's monetary policy could impact growth.

A weakening yen means Japanese products are more competitive overseas, and is bad news for the South Korean car and consumer electronics firms which compete against Japanese exporters.

What to watch:

- Signs of a pickup in the euro zone and other Western economies where South Korean exports are consumed.

- If the weakening yen prompts South Korea to try to lessen the value of the won.

- Interest rates and GDP figures throughout 2013. (Editing by Daniel Magnowski)