Foreign direct investment in this year's first quarter hit a record-high USD 7.05 billion. (Yonhap News)

By Park Hyeri

The amount of foreign direct investment (FDI) pledged in this year's first quarter broke a record high.

This has reaffirmed the nation's image as a stable investment destination and boosted foreign investor confidence in the country.

The Ministry of Trade, Industry and Energy on April 2 said FDI pledged in the first quarter surged 25.1% year on year to a record USD 7.05 billion.

By sector, manufacturing posted FDI of USD 3.08 billion, up a whopping 99.2%, but that of the service industry fell 2.5% to USD 3.85 billion.

Within manufacturing, electrical and electronics (USD 1.45 billion), machinery and medical precision equipment (USD 540 million), and chemical engineering (USD 340 million) saw significant increases in FDI. In the service sector, finance and insurance saw eye-catching growth with USD 2.19 billion.

By region, Japan posted the biggest FDI increase of 281.8% with USD 1.13 billion, followed by the Greater China region of China, Hong Kong, Macao and Taiwan with 146.7% and USD 2.12 billion.

FDI from the West declined, however. That from the U.S. dipped 3.4% to USD 720 million and those from European Union countries plummeted 69.8% to USD 570 million due to the base effect of large investments made in the previous year.

Greenfield investment, or a type of FDI in which a parent company creates or expands a subsidiary in another country, reached USD 3.86 billion, while investment in mergers and acquisitions posted USD 3.19 billion.

"The record-breaking performance in 2024's first quarter showed that foreign investor confidence in Korea continues despite difficult economic conditions like slowing GDP growth, high interest rates and unfavorable foreign exchange rates," the ministry said. "This is expected to be a solid first step toward reaching our goal of USD 35 billion in FDI for 2024 as proposed by our economic policy direction early in the year."

The Bank of Korea on April 3 said in a report that it had at the end of last month USD 419.25 billion in foreign exchange reserves, an increase of USD 3.51 billion from February.

The country in February ranked ninth in the world in the volume of such reserves. China topped the list with USD 3.22 trillion, followed by Japan with USD 1.28 trillion, Switzerland USD 854.4 billion, India USD 625.2 billion and Russia USD 582.6 billion.

hrhr@korea.kr