Bangko Sentral ng Pilipinas (BSP) reported on Friday that the country’s Foreign Direct Investment (FDI) has more than doubled in December 2016. BSP said that the FDI reached the amount of US$669 million (P33.6 billion), which is 145.7 percent higher than the US$272 million (P13.6 billion) recorded in the comparable period in 2015.
Year-end FDI inflows
BSP added that reinvestment of earnings for the month of December 2016 reached US$47million (P2.3 billion). The country’s total FDI inflows for 2016 reached US$7.9 billion (P397.2 billion), registering a year-on-year growth of 40.7 percent.
The country's Central Bank said that net equity capital infusion reached US$206 million (P10.3 billion), as equity capital placements of US$294 million (P14.7 billion) more than offset the US$88 million (P4.4 billion) withdrawals. Hong Kong, Japan, the United States, Singapore, and Belgium were the main sources of net equity incomes.
It also noted that the strong investors’ confidence in the country’s macroeconomic condition continues to make the FDI inflows robust. Economists are also convinced that the growth story of the domestic economy reduces the uncertainties over the concerns of the US and Philippine trade relations.
“It is clear that the Philippine economic growth story is intact despite all the uncertainties of US policies and the continuous noise of domestic politics,” Business World reported Ruben Carlo Asuncion, chief economist of the Union Bank of the Philippines, as saying. He added that December’s FDI inflows were unexpected as FDI slowed down following the increase in September 2016.
“This significant growth, I believe, is on the back of solid macroeconomic fundamentals for the past 18 years or 72 quarters. This clearly means that the Philippines’ growth story is no fluke,” Asuncion added.
In 2016, concerns were also high as to how the transition of the US with its new president would affect the country’s trading relations. There were also some negative sentiments as to how President Rodrigo Duterte implied a separation of the country from the US. “These factors, however, were not enough to overshadow the country’s strong economic prospects,” Guian Angelo Dumalagan, market economist at Land Bank of the Philippines, said.
BSP also cited that for the full year 2016, net availing of debt instruments rose by 68.6 percent to US$5.2 billion (P261.4 billion) from US$3.1 billion (P155.8 billion) in 2015. Moreover, equity capital investments posted net inflows of US$2 billion (P100.5 billion), 12.1 percent higher than the US$1.8 billion (P90.5 billion) recorded last year. This resulted as placements of US$2.7 billion (P135.7 billion) outweighed withdrawals of US$643 million (P32.3 billion).
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