South Korea's economic outlook is under the microscope as the nation balances its ambitious goals with the stark realities of its market dynamics. Chey Tae-won, Chairman of the Korea Chamber of Commerce and Industry (KCCI), recently emphasized the country’s economic resilience during efforts to promote the upcoming 2025 APEC CEO Summit to be hosted in Gyeongju. Chey's outreach included letters to the presidents of chambers of commerce from 128 countries and ambassadors from 116 nations stationed in Korea, advocating for international cooperation and reinforcing South Korea's stable operational environment.
"With strong resilience and a stable market economy system, we will swiftly overcome current challenges," Chey declared, underscoring the nation’s capability to withstand fluctuations within the global economy. His commitment to ensuring the successful hosting of the APEC CEO Summit highlights the importance of this event as not just a forum for discussion but as a pivotal moment for regional prosperity.
The summit, themed "3b" (Bridge, Business, Beyond), aims to catalyze connections among governments and businesses, fostering innovation and creating long-term benefits for the APEC community. Lee Sung-woo, head of the KCCI APEC CEO Summit Preparatory Headquarters, noted the proactive steps being taken to promote Korea’s economic stability and readiness for the event. "With just over a year left until the APEC Summit, KCCI is actively leveraging its global chamber of commerce network to promote Korea’s economic stability and preparedness," Lee stated.
While excitement builds toward the APEC Summit, South Korea faces significant economic hurdles, particularly visible within its mergers and acquisitions (M&A) sector. An analysis by Market Insight revealed M&A deals among South Korea's top 20 conglomerates plummeted to their lowest value since 2017, totaling only 4.82 trillion won ($3.3 billion) in 2024. This figure marks a staggering 21.9% decrease from the previous year, reflecting the broader challenges within the economy.
The downturn in M&A activity contrasts sharply with the global trend, where M&A transactions surged by 10% to reach $1.6 trillion during the same period. Leading South Korean firms like Lotte, SK, and GS have shifted focus toward liquidizing assets to manage cash reserves amid economic uncertainties. The decline is exacerbated by the decreased value of the Korean won and stagnation within key sectors.
Investment bankers have noted significant drops in funding for sectors deemed pivotal for future growth, such as semiconductors and biotechnology. A private equity firm representative commented, "as business dynamics declined (in South Korea), it becomes difficult to even narrow down investment candidates." This sentiment reflects broader fears about domestic economic viability.
Hyundai Motor Group stands out as the only major conglomerate to invest significantly overseas this year, pouring 1.3 trillion won to increase its stake in the struggling self-driving joint venture, Motional. Conversely, several conglomerates did not participate in any M&A activities this year, with Lotte focusing on divesting assets instead of pursuing expansions. This shift marks a significant pivot from previous years when acquisition fever dominated strategic conversations.
The M&A drought is compounded by political factors, with uncertainties such as the potential impeachment of President Yoon Suk Yeol and the impending second term of Donald Trump adding layers of unpredictability to the marketplace. An investment banker pointed out, "the deal drought is expected to continue next year," which signals enduring struggles for both investors and corporations alike.
The confluence of these challenges makes the upcoming APEC CEO Summit not just significant for South Korea, but potentially transformative for its economic future. By engaging with global leaders and amplifying its economic profile, South Korea aims to rejuvenate investor confidence and stabilize its market. If the government and businesses can successfully communicate their resilience to the international community, the impact could reverberate positively throughout its economic sectors.
Looking forward, the synergy between preparing for the APEC summit and addressing domestic economic challenges could pave the way for renewed confidence and investment. The coming months will be pivotal as South Korea strives to bridge the gap between aspiration and reality, striving to maintain its image as a resilient economic powerhouse.
South Korea stands at the crossroads of opportunity and adversity, and as preparations for the APEC Summit intensify, the nation’s ability to navigate these waters will be closely watched by global markets.
