NextGen Day

On Monday, the Bangko Sentral ng Pilipinas (BSP) announced that the net foreign direct investments (FDIs) in the Philippines reached $876 million in April.

According to central bank data, the latest net FDIs exceeded the $548 million net inflows in March but were 14.1 percent lower than last year’s $1 billion net inflows.

Most of the investments, totaling $663 million, were in debt instruments. However, this amount was 7.7 percent lower than the $719 million recorded last year.

Meanwhile, net equity other than reinvestment of earnings amounted to $136 million, down from $206 million in 2022. Reinvestments of earnings also declined year-on-year to $77 million from $95 million during the same period last year.

In the first four months of this year, net FDI inflows totaled $2.9 billion, reflecting an 18 percent contraction from $3.6 billion.

Despite the year-on-year decrease, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort remains optimistic about the future rise of net FDI. He attributes the month-on-month increase to the easing concerns over the health of the US banking system, which faced challenges after bank failures in March. The intervention of US regulators prevented a contagion and limited the impact on the global environment.

Ricafort predicts that net FDIs could further improve in the coming months due to easing inflation and global commodity prices, which reduce the cost of FDIs. He also expects the eventual easing of interest rates, particularly in 2024, along with the continued reopening of economies and the projected solid expansion of the domestic economy.

Additionally, Ricafort highlights the advantages of the Philippines, such as its large working-age population and the reopening of the Chinese economy, the second-largest economy in the world and a major trading partner.

Furthermore, factors such as investment commitments from President Ferdinand R. Marcos Jr. and his economic team’s trips abroad, as well as the inclusion of the Philippines in the Regional Comprehensive Economic Partnership (RCEP), the world’s largest free trade agreement, are expected to attract more investments to the country.

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