The European Union: Stability and Scale in a Rewiring Global Economy
At a time when global trade is adjusting to successive economic and geopolitical shifts, the European Union (EU) has remained a steady and reliable trading partner. As a single bloc, the EU maintains a strong footprint in the global exchange of goods, consistently responsible for about one-sixth of global trade volumes. When goods and services are counted together, the EU stands as one of the world’s foremost trading powers.
What sets the EU apart is not simply its size, but its openness. Trade represents a larger share of the Union’s economic activity than in other major advanced economies. European firms are deeply embedded in global supply chains, exporting machinery, pharmaceuticals, vehicles, luxury goods and high-value services across the world. At the same time, the EU remains the world’s largest source and destination of foreign direct investment, a sign of both outward confidence and inward attractiveness.
Following 2023’s stagnation, the EU economy gained momentum, with GDP growth rising from 1.1% in 2024 to 1.5 % in 2025. This recovery was driven by resilient domestic demand as easing inflation and rising wages restored household purchasing power. Investments are recovering, bolstered by the EU’s Recovery and Resilience Facility funds and improving financial conditions, the pace remains steady. Growth is expected to gather modest momentum through 2026 and 2027, contingent on external stability and a continued rebound in private consumption. Long-term sustainability, however, will increasingly hinge on structural improvements in productivity, energy competitiveness, and demographic resilience.
The EU’s trade policy has proven both ambitious and effective, combining global reach with careful strategy. With 44 trade agreements covering over 76 countries, European businesses enjoy access to key markets around worldwide, and this expansion is accelerating faster than ever. Recent landmark agreements with Australia, India and Mercosur open substantial new opportunities. Beyond trade, these agreements help diversify supply chains, secure critical raw materials, and foster cooperation in high-tech and clean-energy sectors. The EU is not only promoting economic growth but also shaping global trade standards, reinforcing its competitiveness, and engaging constructively as a forward-looking international partner.
The Republic of Korea: Innovation-Led Growth in a Competitive Global Landscape
With nominal GDP approaching USD 2 trillion in 2025, Korea remains among the world’s largest economies, anchored by a dynamic export- and technology-driven sector. Its global influence extends well beyond its size: trade accounts for roughly 80% of GDP, making Korea one of the most export-oriented advanced economies in the world. In nominal terms, Korea’s economy sits between Italy and Spain, reflecting its strong industrial and technology-oriented profile.
Its network of trade agreements reflects Korea’s outward-focused trade strategy. As of 2025, Korea has concluded around 21 comprehensive free trade agreements covering nearly 60 countries, encompassing a significant share of global economic output. Recent developments - including the conclusion of the Korea–Malaysia FTA in late 2025 and the planned modernisation of the Korea‑Singapore FTA - underscore the country’s commitment to deepening market access, strengthening investment channels, and expanding cooperation.
Korea’s economy is entering a steady recovery phase, with GDP growth projected to reach 1.7% in 2026 following a modest 1.0% expansion in 2025. Korea achieved a historic milestone last year as total exports surpassed USD 700 billion for the first time, fuelled by record-breaking demand for high-end AI semiconductors and ships. While early 2026 data show a continued surge in outbound shipments, sustained momentum through 2026-2027 will increasingly depend on navigating global trade uncertainties and structural constraints as the initial boost from the semiconductor super-cycle begins to normalise.
The EU continues to account for roughly one tenth of Korean exports in goods, providing a stable market.
EU–Korea Trade and Investment: More Than a Trade Deal
The EU–Korea FTA, in force since 2011, has become one of the EU’s most substantial bilateral economic relationships. Trade in goods between the two partners rebounded in 2025 to around EUR 124 billion, with a trade deficit for the EU of around EUR 15 billion. The trade balance is nuanced. The EU imports large volumes of Korean semiconductors, vehicles, batteries and electronic components, resulting in a goods deficit. However, this is partly offset by a consistent European surplus in services, particularly in finance, professional services and intellectual property.
Bilateral trade in services reached around EUR 33 billion in 2024 (latest Eurostat data), growing modestly by 4% year-on-year. The EU has maintained a long-standing surplus in services trade with Korea, totalling EUR 8.6 billion in 2024. It also remained the largest foreign investor in Korea, with an FDI stock of EUR 53 billion (24.4% of Korea’s total), ahead of Japan (18.5%), the US (16.5%), Southeast Asia (16.2%), and China (5.8%).
Investment ties have deepened, with Korean companies expanding across Europe in batteries, electric vehicles, and semiconductor facilities. These long-term, strategic investments reflect industrial alignment rather than short-term trade flows.
The partnership increasingly focuses on shared priorities: decarbonisation, digital transformation, and supply chain resilience. Cooperation now extends beyond tariff reduction to emerging industries and regulatory standards. The EU–Korea relationship counters the narrative of fragmentation. Despite modest growth and structural challenges, both economies show that open markets, strong institutions, and technology underpin resilience.
