Foreign direct investment (FDI) pledges have hit their highest level in nine years, totaling $6.79 billion for the first seven months of 2009 for a year-on-year increase of 32.4 percent. After a steep drop in the first quarter, FDI rebounded in May and the upward trend remains steady. Enhanced price competitiveness and signs of a rapid economic recovery are believed to be behind the increase. Foreign investors are also expressing greater confidence in Korea’s economic growth potential.
The surge in FDI is especially noteworthy because the global economic recession has depressed FDI in most advanced countries and some emerging markets. A survey of 240 company executives from the largest non-financial transnational corporations by the United Nations Conference on Trade and Development (UNCTAD) found that nearly 58 percent of respondents planned to cut back investment in 2009.
Nevertheless, Korea has been receiving positive attention from international agencies with regard to its future economic growth prospects. The International Monetary Fund (IMF) recently adjusted its economic growth forecast for Korea, predicting the economy would contract only 1.8 percent compared with a previous estimate of 3 percent. The Organization of Economic Cooperation and Development (OECD) predicted that of all 29 OECD member countries, Korea’s economy would rebound at the fastest pace.
In an effort to maintain a steady inflow of FDI, the government will work consistently to provide a better investment environment. We will remain attentive to foreign investors’ opinions and address the issues they raise.