Korea's FDI Declines 9.2% to $6.4 Billion Amid Global Uncertainties

In the first quarter of this year, the amount of foreign direct investment (FDI) based on reports decreased by 9.2% compared to the same period last year. Observations suggest that the tariff policy of the Donald Trump administration had an impact.

According to the Ministry of Trade, Industry and Energy on the 3rd, the cumulative FDI in the first quarter of this year recorded $6.41 billion (9.4 trillion won) based on reports. This is a decrease of 9.2% compared to $7.05 billion during the same period last year.

The FDI in the first quarter of last year was a record high. The first quarter of this year corresponds to the second largest amount on record.

In contrast, the reported greenfield investment for new factories and other facilities recorded $4.66 billion, an increase of 20.7% compared to the previous year. The ministry explained that "despite uncertain domestic and international conditions, the greenfield investment reports set a new record for the first quarter" and that "job creation and revitalization of the regional economy are expected."

On the other hand, the reported amount of mergers and acquisitions (M&A) investment was $1.74 billion, a decrease of 45.4% compared to the same period last year.

By country, investment from the United States increased by 15.0% to $830 million (based on reports). The arrival amount decreased by 25.3% to $220 million. Investments from China reported $330 million, a decrease of 75.0%, while the arrival amount decreased by 24.9% to $40 million.

By sector, the reported amount of investment in manufacturing was $2.33 billion, a decrease of 24.5%. The arrival amount decreased by 43.2% to $570 million.

An official from the ministry noted that "the slight decrease in FDI reporting results is presumed to be due to the base effect of last year's record first quarter achievements and the deepening wait-and-see attitude in investment due to uncertainties in both domestic and foreign economies, as well as the reduction in the USD amount of investments due to the depreciation of the won."