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Korea's pledged FDI hits record high in hint of optimism for 2025

Published: 07 Jan. 2025, 17:37

SHIN HA-NEE
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Trade Minister Cheong In-kyo speaks during a press briefing at the Sejong government complex on Jan. 7. [MINISTRY OF TRADE, INDUSTRY AND ENERGY]

Korea's pledged foreign direct investment (FDI) hit a record high last year, a sign that the country's trade ties with major economies remain strong despite administrative shake-ups domestically and overseas.

Pledged FDI rose 5.7 percent on year to $34.57 billion through 2024, reaching a new high for the fourth consecutive year, according to a report the Industry Ministry released Tuesday.

Korea’s trading networks with major economies made the country attractive as a relatively stable investment destination for foreign investors, especially those from China, amid surging protectionism worldwide, the ministry suggested.

“Foreign investors consider Korea’s Free Trade Agreement networks a reliable trade route amid rising protectionism,” said Trade Minister Cheong In-kyo during a press briefing on Tuesday.

Realized investment, however, fell 24.2 percent to $14.77 billion, its lowest level since 2020 when the country logged $11.53 billion and the first downturn since that year.

The ministry blamed the drop on the weak local currency, as well as a time lag between initial commitments and the actual execution of investments, which can span multiple years for greenfield investments.

During the briefing, Chung expressed cautious optimism in this year’s export outlook despite mounting concerns, expecting this year’s exports to reach $700 billion, up from last year’s record of $683.8 billion.

Regarding the incoming Trump administration’s protectionist policy proposals, Chung noted that “No concrete details have been announced yet,” but added that “the government has prepared plans for each possible scenario.”

By country, FDI pledges from Japan took a steep surge by 375.6 percent on year to $6.12 billion. Commitments from China also soared by 266.1 percent to $5.79 billion.

Pledges from the United States dropped 14.6 percent to $5.24 billion and the EU nations by 18.1 percent to $5.1 billion, mainly due to a base effect from the previous year and political changes, according to the ministry.

By industry, manufacturing led the growth, rising 21.6 percent to $14.49 billion. Within the sector, semiconductor-related investments rose 46.5 percent to $1.33 billion while the bio segment saw a 254.2 percent jump to $1.23 billion.

BY SHIN HA-NEE [[email protected]]