Philippines: FDIs sink during Omicron wave in January
MANILA, Philippines — Foreign investors shied away from the Philippines in January amid concerns surrounding the Omicron variant surge and the return of strict pandemic curbs that month, the Bangko Sentral ng Pilipinas reported on Monday.
What’s new
Data from the BSP revealed foreign direct investments recorded a net inflow of $819 million in January, contracting 16% year-on-year. A net inflow means more FDIs entered the country against those that left.
On a monthly basis, FDI shrank 23.17%.
Why this matters
Unlike the so-called “hot money” which enters and leaves markets with ease, FDIs are firmer commitments that provide jobs for Filipinos, so the government wants to attract more FDIs and not only keep existing ones.
For this year, the central bank projects a full-year haul of $11 billion net inflow, higher than the actual $10.5 billion net inflow recorded last year.
What an analyst says
Nicholas Mapa, senior economist at ING Bank in Manila, said:
“The Omicron surge could have very well impacted investor sentiment however FDI investors are likely more long term in their view of the economy. As such, the slowdown could be tied to more pervasive concerns about the overall economy such as rising debt issues, now becoming chronic inflation problems and the outlook on interest rates in the medium term. The ongoing conflict in Eastern Europe and its implications on global growth would however be something that FDI investors would be worried about, that on top of anxiety ahead of the polls in May.”
Other figures
- Equity capital placements, a measure of new FDIs, plunged 68.2% on yearly basis to $118 million in January. Majority of this fresh capital came from Japan, the United States, the Netherlands, and Malaysia.
- Intercompany borrowings between multinational companies and their local offices grew 18.3% year-on-year to $634 million to start the year.
- Reinvestment of earnings inched down 1.26% on-year to $78 million in January.
Source: https://www.philstar.com/business/2022/04/12/2174061/fdis-sink-during-omicron-wave-january