South Korea’s overseas direct investment declined 13.4 percent year-on-year in the second quarter of 2025, reflecting reduced capital outflows across key sectors amid a challenging global economic environment. Data released by the Ministry of Economy and Finance on Friday showed that South Korean companies invested a total of US$14.15 billion abroad between April and June, down from US$16.34 billion in the same period last year. The second-quarter figure also marks a sequential decrease from the US$15.74 billion recorded in the first quarter of 2025.
Despite the overall downturn, investments in the financial and insurance sectors increased sharply, reaching US$6.63 billion, an 18.9 percent rise from the previous year. These sectors accounted for the largest share of outbound investment during the quarter. Conversely, investments in manufacturing fell by 9.1 percent to US$3.53 billion, indicating a continued slowdown in industrial capital deployment abroad. The information and communications sector recorded a significant contraction, with outbound investments declining 43.6 percent year-on-year.
The real estate and leasing sector also registered a notable drop of 37.8 percent during the same period. From a regional perspective, North America remained the primary destination for South Korean overseas investment, attracting US$5.54 billion, or nearly 40 percent of the total quarterly outflow. Asia followed with US$3.17 billion, and Europe received US$3.11 billion. Investment in Latin America declined by 58.6 percent to US$613 million, while flows to Oceania dropped 48.2 percent to US$503 million.
Ministry reports second consecutive quarterly contraction
Investment in the Middle East fell by 49.1 percent to US$174 million, and Africa received only US$24 million, marking a steep 87.7 percent decrease. The Ministry stated that the slowdown in total outbound investment reflects cautious spending by corporations amid international economic uncertainties. It also noted that while the year-on-year decline was notable, the contraction was less severe than the previous quarter’s annualized decrease of 26.8 percent. Outbound investment is a key metric for gauging South Korea’s corporate global engagement and long-term strategic positioning.
The latest figures reflect a shift in corporate capital allocation priorities, with financial services maintaining momentum, while traditional sectors such as manufacturing, real estate, and information technology are experiencing scaled-back commitments. The decline in overseas investment comes amid a broader global trend of restrained capital expenditure, as companies adjust their international operations in response to economic headwinds, cost pressures, and fluctuating demand conditions in major markets.
Korean capital outflows decline across multiple continents
According to the Ministry’s quarterly bulletin, the government will continue compiling detailed sectoral and regional data on outbound investment flows as part of its regular economic monitoring. No changes were announced to current regulatory or policy frameworks governing overseas investment activity by Korean firms. South Korea has historically maintained robust outbound investment levels, with corporations actively deploying capital in North America, Southeast Asia, and Europe, particularly in sectors such as semiconductors, energy, banking, and logistics.
The current decline in activity, however, suggests a recalibration of external business strategies during a period of economic transition. In the first half of 2025, South Korea’s total overseas direct investment amounted to US$29.89 billion, representing a 20.3 percent year-on-year decrease compared to the US$37.49 billion posted in the first six months of 2024, underlining sustained downward pressure on global capital deployment by Korean firms. This persistent drop in outbound flows reflects a broader contraction in cross-border investments amid tighter monetary conditions and rising geopolitical risks. – By Content Syndication Services.