BSP blames risk aversion for $13M net outflow of FDIs in April

MANILA, Philippines—Foreign direct investments registered a net outflow of $13 million in April in what monetary officials blamed on risk aversion caused by the prolonged debt crisis in the eurozone.

The outflow during the month reversed the $78-million net inflow registered in the same month in 2011, the Bangko Sentral ng Pilipinas reported.

“In April, concerns about the eurozone escalated as reflected in sharp increases in borrowing costs for some European countries, and this has dampened global risk appetite,” the BSP said in a statement.

“Notwithstanding the Philippines’ favorable macroeconomic conditions, investors were wary of potential spillovers of the eurozone’s sovereign credit problems,” the central bank added.

There were almost no inflows of FDIs during the month, while outflows reached $13 million.

The country’s anemic performance in cornering FDIs during the month brought the total for net inflow for the first four months of the year to $837 million. This was, nonetheless, still up by nearly 47 percent from $571 million in the same period in 2011.

The year-on-year rise in net inflow in the first four months was believed to be due to positive sentiment on the Philippines resulting from its favorable economic performance in the first quarter.

The Philippine economy, measured in terms of gross domestic product, grew by 6.4 percent in the first quarter from a year ago. This was the second-fastest growth rate for Asia in the first three months following China’s 8.1 percent.

The sectors that benefited most from the FDIs in the first four months were manufacturing, real estate, wholesale and retail trade, financial and insurance, and mining and quarrying.

The FDIs came mostly from investors based in the United States, Australia, the Netherlands, United Kingdom, Japan and Bermuda.

Although the Philippines posted a net inflow in FDIs in the first four months, the country remains to lose in the competition in the region for cornering FDIs. Neighbors like Thailand, Malaysia and Indonesia are cornering at least twice as much FDIs.

Philippine economic officials, however, expressed confidence ongoing governance reforms and rising public spending for infrastructure would help attract more foreign investments into the Philippines over the short to medium term.