FDI rises 15 percent in the first quarter to $5.45 billion

Jung Jong-young, director general of the Trade Ministry’s investment policy, announces FDI in the first quarter in Sejong on Thursday. [YONHAP]

Foreign direct investment (FDI) in the first quarter rose 15 percent on year despite economic troubles globally and war in Ukraine.

Investment inflows from the United States were particularly strong.

According to the Ministry of Trade, Industry and Energy on Thursday, foreign direct investment pledged in the January-to-March period hit $5.45 billion. It was the most ever for a first quarter.

Foreign direct investment in the first quarter of last year was $4.74 billion, also a first-quarter record.

By number of investments, FDI increased nearly 30 percent to 830 in the first quarter 2022.

The government emphasized that the strong inflows came as the global economy faced a number of significant challenges.

"Despite changes in the external environment, including Covid-19 and tensions between the United States and China, Korea has been reporting solid economic growth," said Jung Jong-young, director general of investment policy at the ministry. "The conditions are relatively better than for competing countries. Korea seems to be attractive for investment."

He said Korea's strong supply-chain network seems to be a factor in attracting foreign investment, especially at a time when global sourcing challenges are a significant risk.

"Korea has the second highest manufacturing-to-GDP ratio, after China," the director general said. "As such, investment in materials, parts and equipment related to major industries in which Korea has a competitive edge has increased."

Manufacturing FDI surged by 267 percent year-on-year to $1.64 billion and is 30 percent of the total.

In manufacturing, food manufacturing FDI increased 594 percent to $8.6 billion.

Investment in the electronics and electric category increased 70 percent to $5.26 billion, the biggest jump in manufacturing.

Foreign direct investment in services — which include finance, real estate, wholesale, retail, hotels, restaurants and telecommunications — totaled $3.77 billion, down 9.4 percent year-on-year.

Services FDI was 69.2 percent of the total.

Investment from the United States grew at the fastest pace.

FDI originating from the United States in the first quarter grew 284.7 percent on year to $867 million, 15.9 percent of the total.

U.S. investment in services, especially in IT, rose 663.7 percent, while manufacturing investment increased 1.8 percent.

Investment from Japan grew 95 percent to $477 million, 8.8 percent of the total.

Japanese investment in manufacturing grew 411.2 percent, while services investments from Japan grew 43 percent.

FDI from Europe plummeted 81 percent to $580 million, while investment from China fell 44 percent to $117 million.

European investment in manufacturing increased 1.4 percent and European investment in services dropped 87 percent.

The government cited the sharp increase of investment from Europe a year earlier for the on-year drop.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]