Metro Manila (CNN Philippines, February 10) — Net inflows of foreign direct investments (FDIs) to the country dropped to $793 million in November last year, down by 43.6% compared to the same period in 2021, data from the Bangko Sentral ng Pilipinas (BSP) showed Friday.
In a statement, the BSP attributed the weaker FDI net inflows to “the drop in non-residents’ net investments in debt instruments and reinvestment of earnings.”
Equity capital infusions during the month mostly originated from Japan, Singapore, and the United States. The BSP said they were invested largely in the manufacturing, information and communication, and real estate industries.
The latest reading pushed the country’s year-to-date net inflows to $8.4 billion, down from $9.7 billion in the same period in 2021.
In an emailed report released Friday afternoon, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the latest data was the lowest in two months, but “still among the highest since the pandemic started.”
“The year-on-year decline may have to do with higher base/denominator effects (after $1.408 billion a year ago or in November 2021, the second highest since the pandemic started and also higher vs. the levels before the pandemic),” he said.
Ricafort added that interest rate hikes in the Philippines and the US might have an impact on the net FDI data.
“The slowdown in the net FDI data may also have to do with higher short-term interest rates and the peak in long-term interest rates in the U.S./globally/locally around October-November 2022 that still increased borrowing/financing costs, risk of recession in the U.S.; all of which dragged on investments/FDIs,” he said.
