Foreign investments flow into PH down by a third in March

MANILA  -The net inflows of foreign direct investments (FDI) into the Philippines dropped by 31 percent to $548 million in March from $792 million in the same month last year amid expectations of a slowdown in worldwide economic growth.

The latest monthly readout was a turnaround from a 13-percent growth seen in February and a worsening from the 1.4-percent decrease recorded in March 2022.

The Bangko Sentral ng Pilipinas keeps FDI data that represent capital which actually moved, instead of pledged or planned investments that may or may not be realized.

In a statement, the BSP said the decrease in March “resulted from lower net inflows across all major FDI components amid investor concerns over subdued global growth prospects.”

In March, there was a 37.2-percent drop in non-residents’ net investments in debt instruments, which settled at $389 million from $620 million a year earlier.

Also, net equity capital other than the reinvestment of earnings fell for the fifth month in a row 11.7 percent to $94 million from $106 million.

Further, reinvestment of capital was barely stable at $65 million, with 0.1-percent decrease. Growth for this metric was negative for the second month straight.

Equity capital placements in March came from Singapore, Japan, and the United States. These were invested mainly in the industries of manufacturing; information and communication; and real estate.

The data from March brought the first-quarter readout to net inflows of $2 billion, a 19.6-percent plunge from $2.5 billion in January-March last year.

Michael Ricafort, chief economist at the Rizal Commercial Banking Corp., said net inflows dropped in March when market volatility and risk aversion picked up amid uncertainties due to the failure of some American regional banks such as Silicon Valley Bank, Signature Bank, First Republic Bank.

“But these concerns have eased in recent weeks after the quick action by the US authorities to guarantee the deposits of these banks,” Ricafort said.

The economist added that in the coming months, net inflows might show improved data amid easing trend in inflation and eventually interest rates, as well as expectations that the Philippine economic growth will be among the fastest in the region.