Net FDI down for third month
Net foreign direct investments (FDIs) fell anew in August amid continued concerns over the state of the global economy, the Bangko Sentral ng Pilipinas (BSP) reported.
At $797 million, the amount was 19.2 percent lower compared to the $987 million recorded a year earlier. While less steep compared to July ($460 million, -64.4 percent) and June ($471 million, -51.5 percent), it was still the third straight month of year-on-year declines.
Year to date, net FDI inflows rose to $5.9 billion for January to August, 13 percent lower than the $6.8 billion posted in the comparable 2021 period.
"The slowdown in FDI may be attributed to concerns over weakening global growth prospects, particularly with the moderating demand and policy tightening in major economies," the BSP said in a statement.
All major FDI components logged lower net inflows in August, particularly net investments in debt instruments that fell by 15.3 percent to $600 million from $709 million.
Net investments in equity capital, at $31 million, were 60.7 percent lower year on year.
Reinvested earnings likewise fell to $166 million in August, a 16.4-percent annual decrease.
Equity capital placements during the month mainly came from Japan and the United States. These were primarily channeled to the manufacturing, real estate, and information and communication industries.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., noted that the latest net FDI tally was among the lowest in nearly a year "as recently weighed by higher inflation, weaker peso exchange rate and the sharp increase in US/global/local interest rates."
The number could still pick up in view of the investment commitments from President Ferdinand Marcos Jr.' recent visits to Indonesia, Singapore and the US, he added.
"However, an offsetting risk factor for FDI is any potential increase in new Covid cases locally and worldwide, and also amid lingering concerns over more contagious coronavirus variants that could slow down economic recovery prospects and further growth in FDIs," Ricafort said.
Another risk factor is the Russia-Ukraine war that could further disrupt global supply chains, he continued.
Source: Manila Times