Q1 Foreign Direct Investment Holds at $6.4 Billion, Arrival Amount Hits Record $7.1 Billion

Reported Amount: $6.41 Billion, Up 0.1% YoY
Arrivals: $7.14 Billion, Up 83%
Service Sector: $4.33 Billion, M&A: $2.67 Billion, Both Increased

In the first quarter of this year, foreign direct investment (FDI) showed a modest increase, maintaining a steady trend despite global investment contraction and geopolitical risks. Based on arrivals, FDI reached an all-time high, marking significant achievements in terms of actual capital inflows.

According to the Ministry of Trade, Industry and Energy on April 3, the amount of FDI reported in the first quarter of this year was $6.41 billion, up 0.1% compared to the same period last year. This is the second-highest first-quarter figure on record. During the same period, the actual amount of capital that flowed into the country reached $7.14 billion, surging by 83.0%, and set a new record high.

It is notable that the investment flow persisted even as the global investment environment shrank. The United Nations Conference on Trade and Development (UNCTAD) had previously forecast a potential decline in global FDI projects this year due to geopolitical tensions and policy uncertainty. Despite such circumstances, South Korea’s continued upward trend is seen as evidence of sustained confidence in its investment environment.

By investment type, greenfield investments (establishment of new factories and business sites) amounted to $3.74 billion, a decrease of 19.8%, while mergers and acquisitions (M&A) totaled $2.67 billion, a 53.4% increase. This is interpreted as an expansion of entry strategies through the acquisition of existing assets rather than new investments amid growing uncertainty.

By industry, the service sector led the overall increase in investment. Investments in the service sector grew by 21.5% to $4.33 billion, marking the highest first-quarter figure on record. In particular, there was notable expansion in the financial and insurance ($2.62 billion), distribution ($570 million), and information and communication ($240 million) sectors.

In contrast, investment in the manufacturing sector fell by 47.6% to $1.24 billion. While the declines were significant in the electric/electronics and machinery/medical precision sectors, the chemical and non-metallic mineral sectors showed an upward trend, partially offsetting the overall decrease.

By country, the increase in investment from the United States was especially notable. U.S. investment, centered on information and communication, chemicals, and distribution, totaled $1 billion, up 20.9%. Meanwhile, investment from the European Union fell 4.1% to $1.43 billion, and major Asian countries such as Japan (-71.1%) and China (-19.4%) also reduced their investments.

The government plans to further strengthen its investment attraction strategy going forward. It will expand activities to attract investment in strategic sectors such as advanced manufacturing, artificial intelligence (AI) data centers, and offshore wind power, while also continuing to improve the investment environment by enhancing regional incentives and resolving difficulties faced by foreign-invested companies.

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