Due to High Interest Rates... Overseas Direct Investment Also Shrinks

MoEF, Announces '3rd Quarter Overseas Direct Investment Trends'

[Asia Economy Sejong=Reporter Lee Jun-hyung] Overseas direct investment (ODI) in the third quarter of this year decreased by nearly 15% compared to the previous quarter. This is due to increased uncertainty in investment conditions such as interest rate hikes.

According to the "2022 3rd Quarter Overseas Direct Investment Trends" announced by the Ministry of Economy and Finance on the 27th, the total ODI amount in the third quarter of this year was recorded at $16.61 billion. This is a 5% decrease compared to the same period last year ($17.48 billion). Compared to the previous quarter, the second quarter ($19.5 billion), the decline rate widened to 14.8%.

Initially, ODI had been on the rise from the second half of last year through the first half of this year. However, as the United States implemented rapid interest rate hikes and South Korea followed suit, the growth trend slowed from the second quarter and turned into a decline in the third quarter. A Ministry of Economy and Finance official explained, "The decrease in ODI appears to be due to uncertainty in domestic and international investment conditions such as interest rate hikes."

Specifically, overseas direct investment in the real estate sector ($1.27 billion) decreased by 44.9% compared to the same period last year, showing the largest decline. On the other hand, some sectors such as financial and insurance services (3.5%) and manufacturing (12.4%) saw increased investment. By region, ODI decreased in North America (-17.1%), Asia (-22.6%), and Oceania (-14.5%). However, ODI increased in Europe (58.7%) and Latin America (12.9%).

Investment recovery amounts were highest in the financial and insurance sector at $1.59 billion. This was followed by real estate ($690 million) and information and communication ($270 million). By country, the United States ($760 million), Cayman Islands ($510 million), and Luxembourg ($450 million) ranked highest.

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