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Philippines: FDIs eke out gains in October amid headwinds
MANILA, Philippines — Foreign direct investments posted modest gains in October, but roiling global headwinds could result in a smaller haul by the end of 2022.
Data released by the Bangko Sentral ng Pilipinas on Wednesday showed that FDIs grew 6.3% year-on-year to $923 million in net inflows.
In the first 10 months, FDI posted a net inflow of $7.6 billion, down 8.3% on an annual basis. FDIs represent firmer commitments from foreign investors that generate jobs for Filipinos unlike the so-called “hot money”, which enters and leaves markets with ease.
The BSP projected the Philippines would rack up $11 billion in net FDI inflows in 2022, higher than the actual $10.5 billion generated in the preceding year.
Sought for comment, Domini Velasquez, chief economist at China Banking Corp., expects the FDIs haul to decline by the end of 2022.
“Although we saw a slight uptick in October, on a cumulative basis we expect net FDI to end lower in 2022 due to weakening global growth and tighter financial conditions,” she said in a Viber message.
Global capital markets are dealing with rising interest rates, which experts fear would send economies into recessions this year.
“In 2023, the outlook may the BSP expects FDI to increase at more modest levels following dampened investor sentiment from external headwinds. Just yesterday, the World Bank halved its global growth outlook for 2023 and now expects weaker growth in all regions of the world,” Velasquez added.
Data broken down showed that equity capital placements, a measure of new FDIs, advanced 22% year-on-year to $188 million in October.
Inflows benefitted largely from a boost in intercompany borrowings between multinational companies and their local affiliates. The BSP reported a 5% year-on-year growth to $667 million during the month.
Reinvestment of earnings dipped 6.8% on-year to $85 million in October.
“The Philippines should ensure that garnered investment pledges turn to actual investments. We have been waiting for the IRR of the amendment of the public services act as it is expected to liberalize game-changing sectors,” Velasquez said.
Source: https://www.philstar.com/business/2023/01/11/2236862/fdis-eke-out-gains-october-amid-headwinds