FDIs decline 13.4% end-Nov. 2022

The country’s net foreign direct investments (FDI) fell 13.4 percent as of end-November 2022 to $8.43 billion from $9.74 billion same time in 2021 amid ongoing economic uncertainty and global economic slowdown.

Based on Bangko Sentral ng Pilipinas (BSP) data, net FDI for the month of November alone decreased by 43.6 percent to $793 million from $1.4 billion in 2021.

FDI components are equity capital, reinvestment of earnings, and borrowings. The BSP defines FDIs as the investments of a non-resident direct investor in a domestic enterprise with at least 10 percent equity capital, and investments of a non-resident subsidiary in its resident direct investor.

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The BSP on Friday, Feb. 10, noted lower net investments in debt instruments and reinvestment of earnings. Net placements of equity capital however increased.

On a cumulative basis, net debt investments dropped 17.7 percent year-on-year to $5.9 billion from $7.17 billion while reinvestment of earnings fell eight percent to $1.08 billion from $1.18 billion. Net equity other than reinvestment of earnings grew 4.2 percent to $1.44 billion from $1.38 billion.

“By country source, equity capital placements came mostly from Japan, Singapore, and the United States. These were invested largely to the manufacturing; information and communication; and real estate industries,” said the BSP.

About 30 percent of FDIs were invested in the manufacturing sector, 18 percent in the real estate sector and 15 percent in the financial and insurance sector.

The BSP has reduced its net FDI projection for 2022 to $8.5 billion from its previous estimate of $10.5 billion.

For 2023 however, the BSP expects a net FDI of $11 billion.

The International Monetary Fund (IMF) in its January 2023 World Economic Outlook (WEO) report forecasts a global gross domestic product (GDP) growth of 2.9 percent this year, lower than the estimated 3.4 percent for 2022.

For the Philippines, the IMF expects GDP growth of five percent for this year, which was lower than the government target of six percent to seven percent.

The latest WEO update highlighted a peaking global inflation while maintaining a low growth outlook.

The BSP registers FDIs, foreign portfolio investments and other forms of foreign investments to facilitate the banking sector’s access to foreign exchange resources for the repatriation of capital or the remittance of related earnings in the local currency while sustaining the inflow of foreign investments to fund economic growth.

Unlike the FDIs reported by other government agencies such as the Philippine Statistics Authority, the BSP said its FDI reports are actual investment inflows and not investment commitments.