BSP: Foreign investments surged in January over optimism about economy's reopening, vaccine news

enablePagination: false
maxItemsPerPage: 10
totalITemsFound:
maxPaginationLinks: 10
maxPossiblePages:
startIndex:
endIndex:

(STOCK PHOTO)

Metro Manila (CNN Philippines, April 12) — The Philippines raked in more foreign investments in January compared to same period a year ago, the central bank reported on Monday.

In a statement, the Bangko Sentral ng Pilipinas said foreign direct investments (FDI) worth $961 million entered the country during the month. This is up 41.5% from the $679 million tallied in January 2020.

“This development reflects the investors’ optimism at the start of the year due in turn to the gradual reopening of the economy under the ‘new normal’ condition, easing of lockdown measures, and positive news about the rollout of COVID-19 vaccines,” said the BSP.

January’s figure ended months of annual contraction of FDI inflows beginning September.

More foreigners placed funds into debt instruments during the month, mainly driving the strong performance of FDIs in January. Investments stood at $535 million, which BSP said is a 116% growth from the $248 million recorded during the same month in 2020.

Investments in equity capital, meanwhile, posted a meager growth of 0.5% to $351 million from the $350 million a year ago.

“This resulted following continued inflows from new placements, amounting to US$362 million in January 2021 (from US$374 million last year), coupled with less withdrawals of US$10 million in January 2021 (from US$24 million in January 2020),” said the central bank.

On the other hand, reinvested earnings dwindled to $74 million, some 9.2% down from the $82 million observed last year.

Most equity capital placements made in January came from Singapore, Japan and the Netherlands. These were largely funneled into these sectors: 1) financial and insurance, 2) manufacturing, and 3) professional, scientific, and technical industries.

FDIs are often touted as a key source of employment for Filipinos, with more capital placements expected to generate additional job opportunities for them.

It is unclear, however, how long the optimism observed in January will be sustained especially with institutions like World Bank and Fitch Solutions eventually slashing their 2021 growth forecasts for the Philippines as the country faces tighter lockdown rules due to a surge in COVID-19 cases. Both projections hover below the Development Budget Coordination Committee's current 6.5% to 7.5% target range for this year.

​In a market report, RCBC chief economist Michael Ricafort flagged the alarming increase in recent coronavirus infections locally and delays in the rollout of vaccine doses as "offsetting risk factors" in recovery prospects for FDIs. He also noted the risk of further lockdowns and travel restrictions both domestically and internationally as the world continues to grapple with the health crisis.