Foreign direct investment to Korea drops 9.7%

New foreign direct investment (FDI) pledged to Korea in the first three quarters of this year declined due to military tension on the Korean Peninsula and rising protectionist sentiment among major trading partners, the government said Thursday.

Korea received $13.59 billion in FDI commitments from January to September, retreating 9.7 percent from a year earlier, according to the Ministry of Trade, Industry and Energy.

The amount of actual investment made by foreign investors and companies, however, rose 9.1 percent to $8 billion over the cited period, the ministry said.

New FDI pledges from Korea’s two largest trading partners - the United States and China - have diminished as both have increasingly taken protectionist measures. New investment from the United States decreased 5.5 percent to $2.9 billion, and that from China dropped 19.5 percent to $3.64 billion, the ministry said.

In contrast, FDI pledges from European Union countries jumped 22 percent over the cited period.

“The political and economic environment is not positive at home or abroad due to rising geopolitical risk, protectionist trade practices and the possibility of an additional interest rate hike in the United States,” the ministry said in a release.

North Korea has conducted a series of nuclear and missile tests this year that have drawn strong condemnation from the international community.

By industry, new FDI pledges in the country’s manufacturing sector declined 3.5 percent to $4.16 billion, and those in the service sector went down 8.8 percent to $9.38 billion.

The ministry said foreign investment is unlikely to make a turnaround in the fourth quarter because the United States and European Union are rolling back quantitative easing measures and prospects for Brexit talks remain uncertain.

Yonhap