The National Economic and Development Authority (NEDA) has said the three leading growth factors – foreign direct investments (FDIs), gross international reserves (GIR) and hot money – are all equally important to determine the financial health of the country.

NEDA director-general Ernesto Pernia said each of the three has unique uses, thus the criticisms of some analysts that only the FDI is the primary gauge if a country is growing, should not be given attention. FDI is an investment made by a firm or individual in one country with business interests located in another country.

Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets, including establishing ownership or controlling interest in a foreign company.

GIR is any reserve funds that form the country’s external assets—including foreign currency deposits and bonds held by central banks and monetary authorities. International reserves remain an acceptable form of payment among central banks. Reserves themselves can either be gold or a specific currency, such as the dollar or euro.

Hot money or portfolio investments are investment in securities, bonds or stocks of any firm in any country that is intended for financial gain only and does not create a lasting interest in or effective management control over an enterprise where the investments take place.

The investor can withdraw such investment and allocated anywhere.

“FDI feeds into GIR,” Pernia said and stressed that both economic numbers are equally important. When asked if portfolio investment is a good economic indicator as well, he replied, “Useful too.”

The Philippines’ latest GIR is more than $78 billion which is equivalent to over nine months of importation costs.

The Bangko Sentral ng Pilipinas said FDIs totaled $2.2 billion in net inflows for the first quarter of 2018, representing an increase of 43.5 percent from $1.5 billion in the comparable period last year.

Hot money, meanwhile, totaled $162.16-million net inflow as of April 2018, down 46.185% from the year-ago level of $301.33 million and 64.51% smaller than end-December 2017 level of $456.93 million.

Prior to becoming Budget secretary in July 2016, Benjamin Diokno said the ultimate yardstick if an economy is improving is FDI as such investment brings in new technologies, create jobs, pulls real estate value higher and pays income and other taxes wherever the investment is located.

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