FDI inch up to $8.9 billion in 2024

But December’s inflow lowest in 11 years

MANILA, Philippines — Foreign direct investments (FDI) into the Philippines inched up by 0.1 percent to reach $8.93 billion in 2024, breaking a two-year streak of annual declines but narrowly missing the Bangko Sentral ng Pilipinas (BSP)’s $9-billion target for the year.

Despite the modest full-year growth, December inflows plummeted 85.1 percent to $110 million from $743 million in the same month a year ago. This marked the lowest monthly level since December 2013, when net inflows stood at $102.16 million.

For the full year, investments in debt instruments slipped by 4.7 percent to $6.23 billion from $6.53 billion in 2023. Reinvestment of earnings also declined by 11.2 percent to $1.17 billion from $1.31 billion.

However, net equity capital placements – excluding reinvested earnings – jumped by 42.4 percent to $1.54 billion in 2024 from $1.08 billion in 2023. This was driven by a 4.3-percent increase in total equity placements to $2.17 billion, while withdrawals fell to $628 million from $998 million a year ago.

Major sources of capital infusions for the year were Japan, the United Kingdom, the United States and Singapore, with investments mainly directed toward manufacturing, real estate, and information and communication sectors.

Meanwhile, the BSP attributed the steep decline in December to increased debt repayments by resident corporations to their nonresident direct investors.

“While nonresidents’ net equity capital investments rose, FDI declined due to increased debt repayments by resident corporations to their nonresident direct investors,” the BSP said.

As a result of these higher debt repayments, foreign investments in debt instruments reached a net outflow of $19 million in December 2024. This is a sharp reversal from the net inflows of $618 million in December 2023.

Reinvestment of earnings in December also fell by 14.7 percent to $80 million from $94 million a year prior. Meanwhile, equity capital other than reinvested earnings surged by 58 percent to $49 million from $31 million.

In December alone, equity capital placements dropped by 19.4 percent to $185 million, although withdrawals also declined by 31.5 percent to $136 million.

Most of the month’s equity capital inflows came from Singapore, Japan, the United States and South Korea, benefiting sectors such as information and communication, manufacturing and construction.

The BSP expects FDI net inflows to rebound this year, projecting a rise to $10 billion.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the still relatively higher net FDI data was also partly supported recently by rate cuts by the US Federal Reserve and other global central banks, including the BSP.

Ricafort said the reduced borrowing costs increased demand for loans to finance investments, including FDI into the Philippines, both new investments and expansion projects.

He pointed out that lower interest rates and higher FDI could lead to faster and more sustainable economic growth in the coming months.