4-month FDI gains 18.7% to $3.5B

The country’s net inflows of foreign direct investments (FDI) in April dropped by 36.9 percent to $556 million from $881 million recorded in the same month last year.

From January to April, Bangko Sentral ng Pilipinas (BSP) data revealed growth in FDI net inflows of 18.7 percent to $3.5 billion from $3 billion registered in the same period in 2023.

BSP figures showed a faster decline in equity capital excluding reinvestment of earnings at 48.1 percent to $68 million from $132 million.

Meanwhile, investments in debt instruments decreased by 38.8 percent to $407 million from $665 million.

Reinvestment of earnings declined slower by 4.2 percent to $81 million from $84 million.

“This improvement reflects investor confidence in the economy’s resilience amid global uncertainties,” BSP said.

Most investments came from The Netherlands with 63 percent share, Japan with 22 percent, and the United States with 6 percent during the four months.

In April, Japan was the largest investor with 47 percent, followed by the US (21 percent), Malaysia (11 percent), and Singapore (9 percent).

The top industries which received FDI in April were manufacturing with 36 percent share, followed by real estate with 26 percent, and wholesale and retail trade 13 percent.

Year-to-date, the financial and insurance sector dominated with 67 percent share, while manufacturing accounted for only 18 percent and real estate for 7 percent.

These results came after the BSP maintained its 6.5 percent policy rate to lower inflation rates which reached 3.8 percent in April from 2.8 percent in January.

The BSP aims to limit inflation to 4 percent.

BSP cuts

Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said banks might continue to attract investments as the BSP has signaled a rate cut in August due to possible easing inflation.

“Global crude oil prices again corrected to a new one week-lows on ceasefire talks recently between Hamas and Israel,” he said.

Jun Neri, chief economist of Bank of the Philippine Islands, said the recently announced lower rice tariff would further enable consumers to spend on discretionary goods and services.

“That means Filipinos can allocate a bigger share of their budget outside of rice. There are half a million new vehicles, except motorcycles, that will be part of the transportation system by the end of this year. Clearly demand there is very strong,” he said.

Carlo Asuncion, chief economist of Union Bank of the Philippines, said stronger demand for miscellaneous items, such as dining at restaurants, will likely raise inflation in this group to 5.7 to 5.8 towards the end of the year from 5.3 percent in May.