FDI inflow to PH shrank 23% in 2022 to $9.2B
The net inflow of foreign direct investments (FDI) into the Philippines shrank by 23 percent to $9.2 billion in 2022 amid a slowdown in global economic growth, according to the Bangko Sentral ng Pilipinas (BSP).
BSP data show that Philippine-bound net FDI inflow decreased from $11.98 billion in 2021 as both lending and equity capital from overseas dropped last year.
Last year, nonresidents’ investments in debt instruments slumped by 15.6 percent to $6.3 billion from $7.5 billion a year earlier.
Foreigners’ equity, other than reinvestment in earnings, was halved to $1.7 billion from $3.4 billion.
A slight increase in reinvestment of earnings, 5.9 percent to $1.2 billion from $1.1 billion was not enough to offset such decreases.
“Notwithstanding the country’s sustained growth momentum, FDI net inflows decreased in 2022 due to the extended global slowdown and high inflation, which adversely affected investor decisions,” the BSP said.
In December alone, net inflow fell by 76 percent to $634 million from $2.7 billion in the same month of 2021.
The BSP said this was due largely to base effect, particularly given the significantly larger net placements of equity capital in December 2021.
Nonresidents’ net investments in debt instruments likewise declined in December 2022 while reinvestment of earnings remained broadly stable.
Equity capital placements sourced from Singapore, Germany, and Japan were channeled mostly to the manufacturing and real estate industries during the reference month.
Debt instruments
In December, there was a 54.7-percent drop in nonresidents’ net investments in debt instruments, to $286 million from $632 million in the same month of 2021.
Also, net equity capital—other than the reinvestment of earnings—dropped 86.2 percent to $268 million from $1.95 billion.
On the other hand, reinvestment of earnings was stable at $80 million.Most of the equity capital placements in December came from Singapore, Germany and Japan.
These were invested mainly in the industries of manufacturing and real estate.
Fitch Solutions said in a report that ongoing efforts in Congress to amend the Philippine Constitution could boost long-term economic growth above forecasts.
“While it is still early days in the process, any pro-business changes to the Philippines’ business environment would pose upside risks to our long-term growth forecast for the Philippines and in particular to investment,” Fitch Solutions said.
For 2023-2032, the company forecasts an average real gross domestic product growth of 6.6 percent for the Philippines.INQ
