Synopsis
As reported on March 14, 2024, South Korea's overseas direct investment has declined for the second consecutive year amid geopolitical uncertainties. The decline has slowed compared to previous years, indicating a more stable trend, according to the finance ministry.Key Takeaways
- Overseas direct investment declined for the second year.
- Investments fell by 1.8 percent to $63.95 billion.
- Decline pace is slower than the 22.2 percent drop in the previous year.
- Manufacturing sector saw a 21.6 percent decline.
- The United States was the top recipient of investments.
Seoul, March 14 (NationPress) South Korea's overseas direct investment has experienced a decline for the second consecutive year in 2024, amidst ongoing geopolitical uncertainties. However, this decline has shown a slower pace compared to the previous year, as reported by the finance ministry on Friday.
Investments made by South Korean companies fell by 1.8 percent year-on-year, totaling $63.95 billion last year, according to data from the Ministry of Economy and Finance, as reported by Yonhap news agency.
The 2024 total reflects a significant improvement from the prior year’s 22.2 percent decrease, which marked the first annual decline since 2020.
In a press release, the ministry stated, “Despite ongoing global uncertainties, including sustained high interest rates and geopolitical risks, the decrease in overseas direct investment has moderated compared to last year, indicating a relatively stable trend.”
The ministry noted that the slower decline can be attributed to increased investments in alternative assets by pension funds in developed economies, along with ongoing corporate investments in high-tech sectors, particularly semiconductors and batteries.
By sector, while offshore investments in most industries increased last year, the manufacturing sector faced a significant decline of 21.6 percent year-on-year, which counterbalanced gains in other sectors.
The United States received the largest share of South Korea's overseas investments, amounting to $25.88 billion in 2024, followed by Europe at $13.87 billion, according to the data.
Noteworthy is the fact that Europe's share of total investment grew by 4.7 percentage points, rising from 17 percent to 21.7 percent during this period, as highlighted by the ministry.
The finance ministry emphasized that the government will continue its collaboration with key investment destinations to enable South Korean firms to sustain stable operations amid increasing global protectionism and supply chain adjustments.
South Korea's overseas direct investment saw its first drop in three years in 2023 due to an economic slowdown in China and geopolitical uncertainties, according to Yonhap.
In 2022, investments made by South Korean firms decreased by 22.2 percent year-on-year, totaling $63.38 billion, based on data from the Ministry of Economy and Finance.
This represented the first annual drop since 2020, when the figure fell by 11.2 percent. Nevertheless, investments surged by 32.1 percent in 2021 and increased by 6 percent in 2022.
