FDI boost reflects rising confidence

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FDI boost reflects rising confidence

Foreign direct investment (FDI) in Korea jumped 17 percent on-year to $2.34 billion in the first quarter thanks to an inflow of funds from advanced industrialized economies, the government said yesterday.

This is the largest amount since the first quarter of 2008, which reflects expectations that Asia’s fourth-largest economy will grow steadily despite lingering global economic uncertainties, the Ministry of Knowledge Economy said.

The government expects economic growth to reach 3.7 percent this year from a gain of 3.6 percent in 2011, while the Organization for Economic Cooperation and Development has forecast an increase of 3.8 percent. The OECD said global economic growth will reach 3.2 percent in 2012, down from 3.8 percent last year.

FDI from advanced industrialized economies such as Japan and the European Union surged 52.2 percent on-year, offsetting the 43.5 percent plunge in investments from developing countries.

The report showed inflow of investment from Japan soaring 150 percent to $919 million in the three-month period, with numbers for the EU rising 34.7 percent to $584 million.

Investments from China were up 47.2 percent on year to $96 million, while FDI from the United States reached $427 million, down 8.7 from the previous year.

“Investments from Japan reached an all-time high in the January-March period, with solid gains also being tallied for the EU despite its fiscal woes,” the ministry said. The gains from Europe were buoyed by the free trade agreement that went into effect at the end of last July.

According to the ministry, FDI in the manufacturing sector jumped 88 percent on-year, while that for the service industry contracted 30.4 percent.

The ministry said this year’s inflow of foreign investment should continue to expand from a year earlier.

Yonhap

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