FDI up to $451 M in October

MANILA, Philippines - Net foreign direct investments (FDI) expanded in October, reflecting favorable investor sentiment, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Data released by the central bank showed net FDI inflows amounted to $451 million in October last year, $6 million higher than the $445 million in October 2014.

“Favorable investor sentiment on the back of the country’s strong macroeconomic fundamentals resulted in net inflows across all FDI components,” the BSP said.

Gross domestic product (GDP) growth accelerated to six percent in the third quarter of 2015 from the revised 5.8 percent in the second quarter amid robust domestic demand and improving government spending.

This brought the GDP expansion to 5.6 percent in the first nine months of last year, way below the seven to eight peercent target penned by economic managers for 2015.

On the other hand, inflation eased to 1.4 percent last year from 4.1 percent in 2014 amid stable food prices, lower oil prices, and cheaper utility rates. This was way below the BSP target of two to four percent.

Equity placements plunged almost 50 percent to $109 million in October last year from $217 million in October 2014, while withdrawals surged 92.2 percent to $8 million from $4 million.

Data showed the bulk of equity capital placements came from Korea, Japan, US, Thailand, and Taiwan.

By economic activity, equity capital investments were channeled mainly to financial and insurance; real estate activities; manufacturing; administrative and support service as well as electricity, gass, steam, and airocnditioning supply.

On the other hand, earnings of foreign companies operating in the Philippines and plowed right back into the country declined 1.9 percent to $62 million in October last year from $63 million in the same month in 2014.

The BSP said intercompany borrowings from foreign direct investors by their subsidiaries or affiliates in the Philippines surged 71.1 percent to $287 million in October from $168 million and helped offset the sharp drop in equity placements and higher withdrawals.

For the first 10 months last year, net FDI reached $4.98 billion, 4.9 percent lower compared to $5.25 billion in the same period in 2014.

Equity capital investments increased 14 percent to $1.54 billion from January to October last year on account of the 27.7 percent increase in gross placements to $2.34 billion, while withdrawals jumped 66.6 percent to $797 million from $478 million.