NET foreign direct investments (FDI) surged last November but were lower reckoned from the start of 2023, the Bangko Sentral ng Pilipinas reported on Monday.
At $1.0 billion, the net FDI inflow was 27.8 percent higher than the $820 million posted a year earlier.
This took the January-November tally to $7.6 billion, 13.3 percent lower than the $8.7 billion recorded in the comparable 2022 period.
“Notwithstanding the country’s sustained economic growth, FDI remained subdued due to the lingering impact of high inflation and low growth prospects globally,” the central bank said in a statement.
November’s increase, it noted, was primarily due to a 57.8-percent expansion in net investments in debt instruments to $897 million from $568 million a year ago.
This offset a 52.5-percent plunge in net investments in equity capital to $85 million from $180 million and an 8.1-percent drop in reinvestments of earnings to $66 million from $72 million.
Japan and the United States accounted for the bulk of November FDI, which was mostly channeled to manufacturing (49 percent), real estate (16 percent), and construction industries (15 percent).
For January to November 2023, net equity capital placements declined by 26.45 percent to $1.1 billion from $1.5 million a year earlier.
Reinvestments of earnings slid to $1.01 billion, down 6.56 percent from $1.08 billion, while net investments in debt instruments dipped by 11.25 percent to $5.4 billion from $6.2 billion.
Equity capital placements for the 11-month period originated mostly from Japan, the United States, Germany and Singapore.
Half or 50 percent went to manufacturing, followed by real estate (15 percent), finance and insurance (12 percent), and others (24 percent).
Sought for comment, ING Manila Bank senior economist Nicholas Antonio Mapa said actual equity or new FDI experienced a decline of 39.8 percent.
“Hopefully, with the Philippines still posting growth, we could see FDI eventually reverse the slide in 2023,” he added.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the FDI result was still one of the highest levels since the Covid-19 pandemic.
Factors such as inflation easing toward the central bank targets may provide support for potential policy rate cuts later in 2024, he added, potentially stimulating investments in the country.