Net inflows of foreign direct investments amounted to $9.2 billion in 2022, down by 23.2 percent from from the record $12 billion registered in 2021.
The Bangko Sentral ng Pilipinas said the 2022 figure surpassed the $8.5-billion target for the year.
“By component, non-residents’ net investments in debt instruments and equity capital dropped while reinvestment of earnings slightly increased,” the BSP said in a statement.
“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,” it said.
It said that in December, net FDIs declined by 76.2 percent to a three-month low of $634 million from $2.7 billion a year earlier.
“The decline in FDI during the reference month was due largely to base effect, particularly given the significantly larger net placements of equity capital in December 2021. Non-residents’ net investments in debt instruments likewise declined in December 2022 while reinvestment of earnings remained broadly stable,” it said.
It said bulk of the equity capital placements came from Singapore, Germany and Japan which were channeled mostly to the manufacturing and real estate industries in December.
Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said the slowdown in the net FDI data “might also have to do with higher short-term interest rates and the peak in long-term interest rates in the US, globally and locally around October-November 2022.”
He said increased borrowing and financing costs and the risk of recession in the US had impacted investments.
“For the coming months, net FDIs could still sustain among the highest since the pandemic started, as the economy reopened towards greater normalcy, [the] Philippine economy [is] still expected to have one of the fastest growth rates in the region, the country’s attractive demographics, economic reopening of China since December 2022, [and] investment commitments obtained by the new administration from overseas visits/trips in recent months,” Ricafort said.