Foreign Direct Investment Hits Lowest in 2 Years... Impact of High Interest Rates and Middle East Tensions

Ministry of Economy and Finance Announces 'Overseas Direct Investment Trends'

Due to the prolonged high interest rate trend and the worsening situation in the Middle East, overseas direct investment (ODI) in the first quarter of this year fell by nearly 15%.

According to the "2024 Q1 Overseas Direct Investment Trends" announced by the Ministry of Economy and Finance on the 21st, the total ODI amount in the first quarter of this year was recorded at $15.09 billion. This is a 14.6% decrease compared to the same period last year ($17.68 billion). It is the lowest level in two years for a first quarter. The ODI amount in Q1 2022 was $28.23 billion, and in Q1 last year, it was $17.68 billion.

Looking at the quarterly trend, the decline continued after Q4 2022 (-51.2%) but turned to an increase in the previous quarter, Q4 last year (4.5%). Regarding the slowdown after the recovery in Q4 last year, the Ministry of Economy and Finance analyzed that it was "due to the prolonged high interest rate environment and the contraction of investment sentiment caused by geopolitical risks in the Middle East region."

The net investment amount, which is the total investment amount minus recovery amounts such as equity sales and liquidation, was $12.87 billion, down 7.0% compared to the same period last year ($13.84 billion).

By industry, the order was finance and insurance ($5.5 billion), manufacturing ($4.05 billion), real estate ($2.24 billion), and professional scientific and technical services ($930 million). While the decline in finance and insurance and manufacturing continued, real estate and professional scientific and technical services saw significant increases.

By region, North America ($6.75 billion), Europe ($3.7 billion), Asia ($2.15 billion), and Latin America ($1.86 billion) were in order, with Europe continuing its investment growth trend from the previous year. By country, the United States ($6.12 billion), Luxembourg ($1.64 billion), the British Overseas Territories of the Cayman Islands ($1.26 billion) and Jersey ($930 million), and Vietnam ($670 million) were notable, with investment in Jersey standing out.

Centered on regions such as North America and Europe, investments in innovative industries such as aviation mobility and secondary batteries continued, while overseas alternative investments such as real estate gradually expanded to diversify income sources.

The Ministry of Economy and Finance stated, "In a situation where the international community is fragmented and complex geopolitical and geoeconomic crises are intensifying, we will strengthen cooperation with major investment destination countries so that our companies expanding overseas can conduct stable business activities."