Bangko Sentral of the Philippines. (File Photo/Philippine Daily Inquirer)

Net inflow of foreign direct investment (FDI) to the Philippines fell for the third consecutive month to $460 million in July, down 64% from $1.3 billion in the same month last year .

Net inflows have fallen month-on-month since hitting $989 million in April.

The July reading brought the seven-month or January-July figure to a net inflow of $5.1 billion, down 12% from $5.8 billion in the same period last year .

Data from the Bangko Sentral ng Pilipinas (BSP) shows that the decline in net inflows in the first seven months of this year was also a reversal from the 48.9% rise in the same period of 2021.

“All major components of FDI generated lower net inflows in January-July 2022 as foreign investors remained cautious in a still unfavorable global environment,” the BSP said in a statement.

BSP data records capital actually moved, rather than reported commitments or planned investments, which may or may not be fully realized.

Reinvestments

From January to July, nonresidents’ net investment in debt instruments fell 12.6% to $3.56 billion this year from $4.07 billion last year.

In addition, net equity investments other than earnings reinvestment decreased 13.7% from $1.02 billion to $876 million.

In addition, earnings reinvestment was $670 million, down 5.7% from $710 million in the same period last year.

In July alone, net FDI inflows declined largely due to lower net investment by non-residents in the debt securities of their local affiliates. This was recorded at $213 million, an 80.6% drop from $1.09 billion.

“This decline more than offset the growth in their (foreign) net investment in registered capital,” the BSP said.

Most equity investment in July came from Singapore, Japan and the United States. These were invested mainly in the construction, manufacturing and real estate industries.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said July net inflows were the lowest in 14 months or since $455 million in May 2021 amid increased volatility in global markets and premises in June-July 2022.

But Ricafort said there were positive factors offsetting the downward trend in net inflows, including investment commitments estimated at around $18 billion from foreign investors after recent visits by the new administration in Indonesia, Singapore and the United States last month.

“[But we have] yet to be seen if this would translate into real investment/FDI in the country,” he said. INQ

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