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PRESS RELEASES

Korean Foreign Direct Investment, Q1 2017

  • DivisionInternational Economic Affairs Bureau - International Economic Cooperation Division
  • DateMay 18, 2017
  • Tel044-215-7632

Foreign Direct Investment Q1 2017

 

Korean FDI Rises 30.2 percent in Q1 2017[1]

 

 

Korean FDI in the first quarter of 2017 posted a record high, rising 30.2 percent year-on-year from US $8.23 billion to US $10.71 billion.  The annual FDI growth has seen an upward trend in recent years, backed by financial & insurance services and real estate & renting, although strong investment in wholesale & retail and publishing & communications services led the growth in Q1 2017.

 

Korean FDI, Q1 2017

(US$ billions, %)

FDI

2015

2016

2017

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Change

Amount Invested

7.73

9.22

8.23

8.74

8.45

9.83

10.71

30.2

(y-o-y)

9.0

(q-o-q)

 

By industry, FDI rose in wholesale & retail (up 1,094.7%), publishing & communications services (up 472.8%), and electricity, gas, steam & water supply (up 162.7%), but fell in manufacturing (down 31.6%), finance & insurance (down 45.5%) and real estate & renting (down 75.1%).

 

FDI by Industry, Q1 2017

       (US$ billions, %, y-o-y)

 

Q1 2016

Q1 2017

Change

Manufacturing

1.99

1.36

-31.6

Real estate & renting

1.57

0.39

-75.1

Wholesale & retail

0.46

5.45

1,094.7

Finance & insurance

1.73

0.94

-45.5

Publishing & communications

0.16

0.91

472.8

Electricity, gas, steam

& water supply

0.18

0.47

162.7

 

Korean FDI rose for the third consecutive quarter in North America (up 126.1%), but fell in other regions, most notably in Asia (down 8.8%) and Latin America (down 45.9%).[2]

 

FDI by Region, Q1 2017

      (US$ billions, %, y-o-y)

 

Q1 2016

Q1 2017

Change

North America

3.06

6.91

126.1

Asia

2.30

2.10

-8.8

Latin America

1.30

0.70

-45.9

 

By country, Korean FDI increased in the US (up 142.8%), Singapore (up 50.6%) and Vietnam (up 4.0%), but fell in China (down 18.6%) and Cayman Islands (down 57.3%).[3]

 

FDI by Country, Q1 2017

 (US$ billions, %, y-o-y)

 

Q1 2016

Q1 2017

Change

US

2.80

6.81

142.8

Vietnam

0.45

0.47

4.0

China

0.70

0.57

-18.6

Singapore

0.22

0.34

50.6

Cayman Islands

0.82

0.35

-57.3

 

By type, greenfield investments, such as establishment of a foreign subsidiary, fell (down 28.7%), but mergers & acquisitions (up 137.0%) rose.

 

FDI by Type, Q1 2017

      (US$ billions, %, y-o-y)

 

Q1 2016

Q1 2017

Change

Greenfield investment

5.25

3.74

-28.7

Merger & Acquisition

2.94

6.97

137.0

 

Korean FDI in 2017 is expected to grow considering the Korean companies’ overseas business investment and M&A plans.[4]

 

FDI is forecast to grow globally in 2017,[5] backed by the recovery trend in major economies, rising commodity prices and improving global investor confidence.[6]  However, external uncertainties, such as the spread of protectionism and interest rate hikes in major economies, may have constraining effects on global FDI.

 

[1] Beginning in Q1 2017, press releases on Korean FDI are based on the amount invested, instead of the amount reported.

[2] Korean FDI in Asia’s manufacturing (down 21.1%) and Latin America’s finance & insurance (down 63.8%) fell.

[3] Korean FDI in the US wholesale & retail (up 4,470.6%) and publishing & communications (up 776.9%) increased.  FDI in Vietnam’s manufacturing (up 2.4%) and Singapore’s real estate & renting (up 150,677.6%) also went up, while investment in China’s manufacturing (down 39.8%) and Cayman Islands’ finance & insurance services (down 64.0%) dropped.

[4] Samsung Electronics, LG Electronics and Hyundai Motor Company plan to increase investment in the US, and Kia Motors will build its production plant in India.

[5] UNCTAD’s Global Investment Trend Monitor forecasts that FDI in 2017 will increase 10 percent globally.

[6] The IMF World Economic Outlook in April forecast that the global economy will grow 3.5 percent in 2017, compared to 3.1 percent last year.  The World Bank in April announced that energy commodity prices and non-energy commodity prices in 2017 will increase 25.6 percent and 4.0 percent, respectively.  A US consulting firm, A.T. Kearney’s FDI confidence index indicates that more investors (60%) have positive outlook for the global economy in 2017 compared to the previous year (50%).

 

Please refer to the attached PDF file