Seoul: Foreign direct investment (FDI) pledges to South Korea decreased by 18 percent in the first nine months of 2025 compared to the same period last year.

According to Yonhap News Agency, South Korea received $20.65 billion in FDI commitments between January and September, a decline from the record $25.18 billion pledged during the same time frame in the previous year.

The actual FDI that materialized in South Korea fell by 2 percent year-on-year, reaching $11.3 billion. The Ministry of Trade, Industry and Resources pointed to uncertainties in global trade, influenced by U.S. President Donald Trump's extensive tariff policies, and the depreciation of the Korean won against the dollar as contributing factors to the downturn.

The ministry reported an average won-dollar exchange rate of 1,412.79 this year, marking a 4.4 percent increase from 1,352.85 in 2024. Domestic political uncertainties leading up to the June presidential election and a slowdown in corporate merger and acquisition activities also dampened investor interest.

Despite these challenges, the ministry highlighted ongoing investments in the artificial intelligence (AI) sector as a positive sign of foreign investors' confidence in South Korea's economic fundamentals. The ministry committed to making efforts to attract further foreign investment.

By industry, manufacturing FDI pledges dropped 29.1 percent to $8.73 billion, while service sector pledges decreased by 6.9 percent to $11.1 billion. In contrast, AI sector pledges surged by 25.7 percent to $1.79 billion, spurred by investments in AI data centers, autonomous driving software, and robotics.

Investment pledges from the United States rose by 58.9 percent to $4.95 billion, driven by the chemical, logistics, and information and communications sectors. Conversely, FDI pledges from the European Union fell by 36.6 percent to $2.51 billion, while pledges from Japan and China decreased by 22.8 percent and 36.9 percent to $3.62 billion and $2.89 billion, respectively.