[Weekly Review] Overseas Direct Investment Plummets in Q1 Due to COVID-19... 7 Trillion+ Financial Support for Partner Companies

Government to Supply 7 Trillion Won to Aviation and Automobile Partners
Korea's National Competitiveness Jumps 5 Ranks from 28th to 23rd

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is speaking at the 7th Emergency Economic Central Countermeasures Headquarters meeting held on the 19th at the Government Seoul Office in Jongno-gu, Seoul. Photo by Moon Ho-nam munonam@

[Asia Economy Reporter Jang Sehee] Due to travel restrictions imposed by major countries amid the spread of the novel coronavirus infection (COVID-19), overseas direct investment in the first quarter of this year decreased by 15.4% compared to the same period last year, falling to $12.62 billion. The government has decided to provide financial support exceeding 7 trillion won to cooperating companies in key industries and automobile parts industries that are facing difficulties.

◆ Overseas Direct Investment Declines in Q1 for the First Time in Two Years Due to COVID-19 = According to the "2020 Q1 Overseas Direct Investment Trends" announced by the Ministry of Economy and Finance on the 19th, South Korea's overseas direct investment in the first quarter of this year was $12.62 billion, down 15.3% from the same period last year. This is the first decline in two years since Q1 2018 (-27.9%), as it became difficult to travel to major countries such as the United States and China.

Due to the global demand contraction, manufacturing direct investment plummeted by 55.4% to $2.6 billion. The real estate sector recorded a 23.9% increase to $2.02 billion, driven by large-scale real estate investments in the European region. The electricity and gas supply sector increased by 694.0% due to Korea Gas Corporation's investment in a liquefied plant in Canada.

◆ Government to Provide 7 Trillion Won to Aviation and Automobile Suppliers = The government will provide financial support totaling more than 7 trillion won to cooperating companies in key industries and automobile parts industries that are struggling due to the COVID-19 crisis. First, starting in July, the government plans to supply operating funds loans totaling 5 trillion won to cooperating companies in key industries. The target companies are those established before May 1 of this year, including aviation and shipping sectors.

The government is also pushing for financial support worth 2 trillion won for automobile suppliers with low credit ratings. Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated at the 7th Emergency Economic Central Countermeasures Headquarters meeting held at the Government Seoul Office on the 19th, "We will promote financial support of 2 trillion won plus alpha through guarantees, loans, and maturity extensions for vulnerable cooperating companies related to automobile parts with medium to low credit ratings," adding, "We will also establish a special guarantee program worth 270 billion won by pooling resources from the national government, local governments, and completed car companies."

Furthermore, to support the economic activities of businesspeople, the government has expanded the special entry system. Deputy Prime Minister Hong added, "We will expand the special entry system to countries such as Vietnam and Singapore, and also promote exemption from self-quarantine upon return after short-term business trips to countries with low transmission risk."

◆ "Handled COVID-19 Well"... South Korea's National Competitiveness Rises from 28th to 23rd = In the national competitiveness evaluation announced by the International Institute for Management Development (IMD) in Switzerland on the 16th, South Korea ranked 23rd out of 63 countries, rising five places from last year. Rankings improved in all areas except economic performance.

However, declines were observed in employment and fiscal sectors. In employment, rankings dropped in items such as unemployment rate (18th to 20th) and public sector employment ratio (9th to 12th). Additionally, the government debt growth rate fell sharply from 40th to 54th. The government stated, "Our proactive quarantine measures and swift policy responses after the spread of COVID-19 minimized negative impacts, which positively influenced the national competitiveness evaluation."

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