Overseas Direct Investment Frozen in Q1 Due to COVID-19 Impact... Declines for the First Time in 2 Years

MoEF, 2020 Q1 Overseas Direct Investment Trends

[Sejong=Asia Economy Reporter Joo Sang-don] As the novel coronavirus infection (COVID-19) spread worldwide, overseas direct investment (FDI) in the first quarter of this year turned to a decline for the first time in two years.

According to the "2020 Q1 Overseas Direct Investment Trends" announced by the Ministry of Economy and Finance on the 19th, the amount of overseas direct investment was $12.62 billion, down 15.3% from the same period last year. This is the first decline in overseas direct investment since Q1 2018 (-27.9%), marking eight quarters.

The net investment amount, which is the total investment amount minus investment recovery such as equity sales, loan investment recovery, and liquidation, was also $10.55 billion, down 21.4% from the same period last year.

The direct cause of the decrease in overseas investment was COVID-19. A Ministry of Economy and Finance official explained, "January and February were at a similar level compared to the same period last year, but in March, it decreased by 45.6%, showing the impact of investment decline due to COVID-19."

By industry, financial and insurance services accounted for $3.6 billion (28.5% of investment), manufacturing $2.6 billion (20.6%), real estate $2.02 billion (16.0%), electricity and gas supply $1.5 billion (11.9%), and wholesale and retail trade $1.11 billion (8.8%). The financial and insurance sector decreased by 31.3% compared to the same period last year due to uncertainty caused by COVID-19 and the global stock market decline. The Ministry explained that manufacturing decreased by 55.4% due to the base effect from large investments in 2019 and a contraction in global demand. Real estate increased by 23.9% year-on-year due to special factors such as large real estate investments in Europe and North America earlier this year. Electricity and gas supply increased by 694.0% due to domestic gas public enterprises' investment in a Canadian liquefaction plant.

By country, the United States accounted for $3.58 billion (28.4% of investment), Canada $1.37 billion (10.8%), the Cayman Islands $1.08 billion (8.6%), Singapore $860 million (6.8%), and Vietnam $790 million (6.3%). Except for Canada, which increased by 134.6% year-on-year, investments in major countries such as the United States (-7.1%), the Cayman Islands (-17.2%), Singapore (-20.4%), and Vietnam (-16.0%) generally decreased. In particular, the decline in China ($730 million, -56.7%) and Hong Kong ($170 million, -74.9%) was notable.

Investment recovery amounts by industry were led by financial and insurance services ($1.14 billion), real estate ($270 million), and manufacturing ($250 million). By country, the Cayman Islands ($590 million), the United States ($400 million), and the United Kingdom ($180 million) ranked highest.

This content was produced with the assistance of AI translation services.