The Philippines continues to attract foreign investments, with a significant jump in February 2024.
Data from the Bangko Sentral ng Pilipinas (BSP) showed that foreign direct investment (FDI) net inflows went up 29.3 percent to $1.4 billion from $1.1 billion in February 2023.
This development was due to the 927.3-percent expansion in nonresidents’ net investments in equity capital (other than reinvestment of earnings) to $764 million from $74 million in February 2023.
The growth was tempered by the 41.5-percent contraction in nonresidents’ net investments in debt instruments to $533 million in February 2024 from $912 in February 2023.
Reinvestment of earnings also slightly declined 3.8 percent to $66 million from $69 million.
Bulk of the equity capital placements in February came from the Netherlands with investments directed mostly to the financial and insurance industry.
The BSP said that in the first two months, the total FDI net inflows reached $2.3 billion, higher by 48.2 percent than $1.5-billion net inflows recorded in the same period last year.
“The growth in FDI reflects sustained investor confidence in the country’s macroeconomic fundamentals and resilience amid persistent inflationary pressures and global economic uncertainties,” the BSP said.
Michael Ricarfort, chief economist of Rizal Commercial Banking Corp., said the latest year-on-year improvement in the FDI data, among pre-pandemic highs, may have to do with improved economic and financial markets performance in recent months.
The headline inflation trended recently towards the BSP’s targets that could support/justify Fed rate cuts and local policy rate cuts later in 2024.
“Increased FDIs could have also partly been brought about by some realized investment commitments made for more than a year already during the various foreign trips of the administration,” Ricafort said.
“For the coming months, possible cuts in the U.S./global/local policy rates later in 2024, if inflation remains well anchored within inflation target of the central bank, could also lead to further pick up/improvement in FDIs eventually,” he said.
