MANILA, Philippines (Corrected, 11:55 a.m.) — The Philippines exceeded its foreign direct investments target in 2022 despite headwinds and a projected global recession dampening investor sentiment.
Data from the Bangko Sentral ng Pilipinas revealed on Friday that FDI amounted to net inflows in 2022, but plunged 23.2% year-on-year to $9.2 billion haul.
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FDIs represent firmer commitments from foreign investors that generate jobs for Filipinos unlike the so-called “hot money”, which enters and leaves markets with ease.
The BSP had projected the Philippines would rack up $8.5 billion in net FDI inflows in 2022, a watered-down goal that was lower compared to the actual $12.4 billion net inflows generated in the preceding year.
“Notwithstanding the country’s sustained growth momentum, FDI net inflows decreased in 2022 due to the extended global slowdown and high inflation, which adversely affected investor decisions,” the BSP said.
Global headwinds took center-stage in 2022, as expensive fuel prices, supply chain disruptions, China's zero-Covid policy and the US dollar's ascent dominated markets. This in turn fueled recession fears this year as these headwinds forced central banks everywhere to hike interest rates to tame stubbornly high inflation.
In December, FDIs net inflows plummeted 76.2% year-on-year to $634 million due to base effects.
Nicholas Antonio Mapa, senior economist at ING Bank in Manila, said the declining FDI levels spotlighted concerns on the domestic and international front.
“Global growth is expected to face headwinds as economies feel the fallout from Syrian borrowing costs,” he said in a Viber message.
Data broken down showed that intercompany borrowings between multinational companies and their local affiliates slipped 15.6% on-year to $6.33 billion in 2022.
Equity capital placements were slashed 50.5% on an annual basis to $1.95 billion in the same period.
On the other hand, reinvestment of earnings inched up 5.9% on-year to $1.16 billion at the end of 2022.
“Meanwhile, the Philippines remains a good destination for investments but potential players possible want a little more runway to gauge whether the economy is back on track or the recent surge was just on the back of revenge spending that’ll soon fade,” Mapa added.
Editor's note: A previous version of this article erroneously reported that the Philippines missed its FDI target for 2022. This has been amended to reflect the correct figures. We apologize for the error.