MANILA, Philippines – Foreign direct investments posted a net inflow of $379 million in May, in what monetary officials said was an indication the economy would weather the crisis this year without sinking into recession.
“These inflows were more than seven times higher than the year-ago level, and reflected the favorable sentiment of foreign investors following earlier signs of stabilization in the global economy,” BSP Governor Amando Tetangco Jr. said in a statement yesterday.
According to the BSP, net inflow of FDIs stood at only $50 million in May last year.
In the first five months of the year, total net inflow of FDIs reached $1.03 billion, up 86 percent from $552 million in the same period a year ago.
One of the biggest sources of FDI was the equity infusion of Japanese firm Kirin Holdings Corp. to beverage giant San Miguel Brewery.
Earlier reports said that, under an agreement between the two parties, Kirin increased its stake in San Miguel to 48.3 percent after buying an additional 5.05-percent stake in the company for P6.89 billion ($143 million).
Apart from manufacturing, other sectors that benefited from inflows of FDIs in the first five months were real estate, construction, financial intermediation, and trade and commerce.
The Philippines saw a decline in foreign investments—both portfolio and direct—shortly after the United States sank into a recession. The US economic turmoil had affected even appetite for investments in emerging economies like the Philippines.
But according to officials, risk appetite has gradually been improving amid signs that the world economy is on its way to stabilization.
Tetangco said reports of gradual movement toward stability would continue to sustain inflows of investments to the Philippines.
The World Bank and the International Monetary Fund have projected that the Philippine economy would contract this year by 0.5 and 1 percent, respectively. They cited the ill effects of the global crisis on the domestic economy.
Analysts said the Philippines is affected by the turmoil on several channels, including investments, remittances and exports.
The economy, measured in terms of gross domestic product, grew by a measly 0.4 percent in the first quarter, the slowest rate in a decade.
However, the country’s economic managers said the Philippines would not fall into a recession this year and that growth would be faster in the succeeding quarters.
The government expects GDP this year to grow between 0.8 and 1.8 percent.
(Philippine Daily Inquirer)
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