Net inflows of foreign direct investments (FDIs) grew 15.8 percent year-on-year in the first five months of 2024 to $4 billion despite a 1-percent decline in May, data from the Bangko Sentral ng Pilipinas (BSP) show.
The BSP attributed the decline in the net inflows in May to $499 million from $504 million a year ago to the 31.7-percent decrease in non-residents’ net investments in the domestic equity market.
It said foreign investors’ equity placements in the local market reached $161 million in the fifth month this year, lower than $235 million in same period last year.
Bulk of these came from Japan, the US and Hong Kong and were placed in manufacturing, real estate and arts, entertainment and recreation industries.
Reinvestment of earnings fell 3.7 percent to $97 million in May compared to $101 million a year earlier.
Placements by foreign investors on debt papers issued locally rose 43.4 percent to $242 million from $169 million.
Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort traced to investors’ risk aversion the drop in the net FDIs in May, which he said, was the lowest in 16 months.
He said among the concerns was the geopolitical risks brought about by the Israel-Iran conflict following the death of a Hamas leader in Iran.
Ricafort said future FDI development could be impacted by adjustments in the BSP and Federal Reserve’s key rates, global and local inflation and economic and financial market performances.
“Philippine GDP [gross domestic product] growth that is still among the fastest in ASEAN/Asia would help boost investments/FDIs, as a bright spot for the local economy and major source of additional jobs/employment, business activities, and other economic opportunities for the country,” he said.
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