Foreign investments surge 79% to $4.7 B from January to July

MANILA, Philippines - Net inflow of foreign direct investments (FDI) jumped 79 percent to $4.69 billion in the first seven months, the Bangko Sentral ng Pilipinas (BSP) reported yesterday, citing the country’s strong macroeconomic fundamentals.

“The increase in FDI inflows was driven by investors’ positive outlook on the Philippine economy, reinforced by strong macroeconomic fundamentals,” the central bank said.

The latest figure was $2.07 billion higher than the previous year’s $2.62 billion.

The Philippines has posted 70 straight quarters of positive gross domestic product growth. The GDP expansion accelerated to seven percent in the second quarter from 6.8 percent in the first quarter amid the strong boost from election related spending.

This brought the GDP expansion to 6.9 percent in the first half from 5.5 percent in the same period last year.

Economic managers of the Duterte administration see the GDP growing between six and seven percent this year after easing to 5.9 percent last year from 6.1 percent in 2014 due to weak global demand and lack of government spending.

Data showed net equity capital inflows increased 74.7 percent to $1.47 billion in the first seven months from $841 million in the same period last year.

Equity placements rose 55.7 percent to $1.66 billion from $1.06 billion, while withdrawals fell 15.7 percent to $189 million from $224 million.

The bulk of the equity came from Japan, Singapore, Hong Kong, US, and Taiwan. These were channeled to financial and insurance activities; real estate; manufacturing; construction; as well as accommodation and food service.

The BSP data also showed net investments in debt instruments or lending by parent companies abroad to their local affiliates to fund existing operations and business expansion more than doubled to $2.78 billion from $1.32 billion.

For July alone, FDI inflows inched up seven percent $503 million this year from $470 million in the same month last year.

Equity placements plunged 85.5 percent to $46 million in July from $180 million in the same month last year, while withdrawals increased 8.4 percent to $23 million from $21 million.

Gross equity capital placements were sourced mainly from Germany, the US, Singapore, Japan, and Korea. These were invested largely in real estate; wholesale and retail trade; manufacturing; financial and insurance; and construction activities.

The BSP sees FDI inflows rising to $6.3 billion this year amid the country’s strong macroeconomic fundamentals and the implementation of much needed infrastructure projects under the public private partnership (PPP) scheme.

Investors remain wary about the volatile global financial markets brought about by the timing of the second round of interest rate hike by the US Federal Reserve, the economic slowdown in China as well as the decision of the United Kingdom to leave the European Union (Brexit) last June 23.