MANILA -- The Philippines' robust economy continues to attract investors as evidenced by the growth in foreign direct investments (FDIs) and this trend is likely to continue, Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. said.
In the first five months this year, FDIs grew 49 percent year-on-year to USD4.8 billion from year-ago’s USD3.3 billion, boosted mainly by the 469.1 percent rise in net equity investments.
Last June, Philippine monetary officials announced the upward revision in the FDI assumption for the year to USD9.2 billion from USD8.2 billion on account of sustained growth of the domestic and global economy and impact of the government’s infrastructure program. BSP officials review the central bank’s economic assumptions in May and October of every year.
Espenilla said last May’s FDI growth “is a very desirable outcome of policy.”
“That reflects the positive view of investors. That’s another reason why the Philippines is resilient. We’re not as dependent on hot money flows. In fact the money flows have come and gone. And now we’re attracting more cold money or FDI,” he said.
In 2017, the country registered record-high USD10 billion FDI and authorities expect this to continue given the positive developments in the country, among others.
Espenilla considers FDI flows “as matter of basic confidence and resilience in the economy.”
Thus, he pointed out that the six percent growth, as measured by gross domestic product (GDP), in the second quarter of 2018 remains “fairly strong” even if this is a slip from the previous quarter’s 6.6 percent.
He said the slower output was due to the weak performance of the agriculture sector, which grew by a mere 0.2 percent because of the impact of weather disturbances. “There were disruptions in agriculture. So weather affects productions and that affected GDP as well. And if it’s really a weather story then we should expect a rebound down the road,” he said.
The central bank chief said that if the problem points to productivity issues, these are expected to be addressed by the rise of FDIs as well as the government’s increased investments on infrastructure.
“That’s why you have to look at it in the whole developmental process and abstract from short-term factors that seem to set us back from factors that do not necessarily have an immediate impact but will have a positive impact down the road,” he added. (PNA)
