Shrinking Investment
Foreign direct investment (FDI) in South Korea decreased for the first time in two years in the first half of this year due to reasons such as uncertainties rooted in Brexit and the interest rate hike by the Fed and the domestic political instability that followed the impeachment of former President Park Geun-hye.
The Ministry of Trade, Industry & Energy announced on July 4 that the reported amount of the FDI fell 9.1% year on year to US$9.6 billion. The amount of actual investment reached US$4.96 billion, down 4.4% from a year ago.
The reported and actual amounts were US$2.45 billion (up 35%) and US$600 million (down 7.8%) in the case of FDI from the United States. It dropped by 33.5% in the first quarter of this year but jumped by 64.7% in the following quarter.
The amounts were US$2.22 billion and US$1.49 billion for the EU region, down 47.3% and 34%, respectively. When it comes to the Great China region, the amounts were US$2.87 billion (up 0.3%) and US$1.59 billion (up 15.6%). For Japan, the amounts were US$820 million (up 18.3%) and US$570 million (up 33.4%).
By industry, the reported investment in the manufacturing sector edged down 0.5% to US$2.84 billion and that in the service sector fell 8.1% to US$6.68 billion. Green field FDI rose 8.8% to US$7.89 billion whereas M&A FDI dropped 48.3% to US$1.71 billion. The ministry added that FDI in China and Japan fell 4.5% and 67.9% in the first quarter of this year, respectively.