Korea’s outbound foreign direct investment (OFDI) in 2023 amounted to $63.38 billion, falling by 22.2% compared with a year ago, which hit $81.51 billion. Korea’s net investment, which deducts the amount of returns (such as stake sales, liquidation, etc.) from the total investment amount, dropped by 20.6% compared to that of the previous year, amounting to $51.43 billion. Although the OFDI declined continuously until the third quarter, signs of recovery were observed from the fourth quarter onwards.
Korea’s OFDI, 2023 Full Year
(US $billion, %, y-o-y)
|
Korean OFDI |
2018 |
2019 |
2020 |
2021 |
2022 |
2023 |
|
Q1 |
Q2 |
Q3 |
Q4 |
Annual |
|
Amount invested |
51.81 |
65.49 |
58.18 |
76.88 |
81.51 |
17.58 |
15.65 |
15.00 |
15.14 |
63.38 |
|
Change (%) |
14.0 |
26.4 |
-11.2 |
32.1 |
6.0 |
-37.7 |
-21.1 |
-18.3 |
0.6 |
-22.2 |
By industry, Korea’s OFDI decreased in most of the sectors including finance and insurance ($25.66 billion, down 15.5% y-o-y), manufacturing ($20.25 billion, down 19.7%) real estate and renting ($4.24 billion, down 42.6% y-o-y), and wholesale and retail sales ($2.55 billion, down 2.5%) except mining ($3.38 billion, up 40.1% y-o-y).
By region, Korea’s OFDI went to North America ($31.32 billion, down 1.8% y-o-y), Europe ($10.66 billion, down 32% y-o-y), Asia ($10.66 billion, down 47.3% y-o-y) and Latin America ($9.41 billion, down 18.3% y-o-y) with the OFDI to Europe and Asia posting the biggest drop in 2023. By country, the top destinations for the OFDI were the U.S. ($27.72 billion, down 5.7%), followed by the Cayman Islands ($6.17 billion, down 34.9%), Luxemburg ($4.95 billion, down 0.1%), Canada ($3.6 billion, up 44.3%). Korea’s OFDI to China significantly plummeted, particularly in manufacturing sectors ($1.87 billion, down 78.1%).*
* China has been excluded from Korea’s top 5 OFDI destinations for the first time since 1992.
The decrease in Korea’s OFDI in 2023 can be attributed to several factors, such as the persistently high global interest rates, with U.S. interest rates reaching their highest levels since 2001, economic slowdown in China and geopolitical risks in Europe. Meanwhile, investments from Korean firms into the U.S. continue, mainly in advanced industries including semiconductors and batteries, aligning with their strategies to restructure global supply chains.
Please refer to the attached files.
