FDI pledges to Korea down 18% through Q3 amid trade uncertainties

Foreign direct investment (FDI) pledges to Korea shrank 18 percent from a year earlier in the first nine months of 2025, data showed Wednesday, amid lingering uncertainties in global trade and the weakness of the Korean won.

Korea received $20.65 billion worth of FDI commitments in the January to September period, compared with a record high of $25.18 billion over the same period last year, according to the Ministry of Trade, Industry and Resources.

The actual amount of investment that arrived in Korea during the period was down 2 percent on-year to $11.3 billion.

The ministry attributed the decline in FDI pledges to trade uncertainties sparked by U.S. President Donald Trump's sweeping tariff policies, as well as the depreciation of the Korean won against the U.S. dollar.

The average won-dollar exchange rate reached 1,412.79 this year, up 4.4 percent from 1,352.85 in 2024, according to the ministry.

Investors' appetite was also weak due to domestic political uncertainties in Korea before the June presidential election and a slowdown of the corporate merger and acquisition activities.

"However, continued investment in the artificial intelligence[AI] sector, led by the information and communications industries, suggests that foreign investors remain confident in the fundamentals of the Korean economy," the ministry added, vowing efforts to attract more foreign investment to the country.

By industry, FDI pledges in the manufacturing sector sank 29.1 percent on-year to $8.73 billion through September, while those in the service sector dropped 6.9 percent to $11.1 billion.

FDI pledges in the AI sector rose 25.7 percent to $1.79 billion, driven by AI data centers, autonomous driving software and robotics.

By country, fresh investment pledges from the United States jumped 58.9 percent to $4.95 billion, mainly led by the chemical, logistics, and information and communications sectors.

On the other hand, FDI pledges from the European Union decreased 36.6 percent to $2.51 billion, while those from Japan and China went down 22.8 percent and 36.9 percent to $3.62 billion and $2.89 billion, respectively.

Yonhap