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By Maricel E. Burgonio, Reporter
THE Bangko Sentral ng Pilipinas (BSP) warned
that foreign investments—both direct and portfolio inflows—would
ease this year due to higher inflation and a global economic
slowdown.
In a briefing, Iluminada Sicat, BSP director for
the economic statistics department, said the central bank revised
downwards its forecast for foreign direct investments (FDI) and net
foreign portfolio investments for this year.
Under the new scenario, job-generating FDI is
expected to reach $2.6 billion this year, lower than an earlier
forecast of $4.2 billion due to the postponement of some mining
investments brought about by environmental issues and higher prices.
“Some of the mining investments were moved
forward. It could be next year,” Sicat said, adding the BSP
expects these inflows to reach $905 million this year, lower than
the earlier projection of more than $1 billion.
In the first quarter of the year, the BSP
reported $520 million in net FDI, or 60.5 percent lower than the
$1.3 billion in the same period last year.
Equity capital inflows were channeled mainly to
manufacturing, services, construction, mining, real estate, and
financial institutions.
Foreign equity capital placements recorded a net
inflow of $193 million, 71.8 percent lower than the comparable
period last year.
Despite the lower forecast, BSP Gov. Amando
Tetangco Jr. said the US Federal Reserve’s plan to keep its
interest rates steady would be to the Philippines’ advantage.
“The Fed’s emphasis on inflation could be
positive for emerging market economies in the medium term.
Nonetheless, we would continue to monitor the direction of
short-term capital flows as well as other domestic developments to
ensure that our inflation expectations are contained,” Tetangco
said in a text message.
The BSP also cut its forecast for net foreign
portfolio investments due to the global credit squeeze. Portfolio
money is invested in shares of listed companies and other
peso-denominated financial assets.
The central bank projected net portfolio
investments to reach $1.1 billion this year, significantly lower
than the $3.2 billion earlier estimated.
The BSP already incorporated the government’s
planned foreign borrowing of $500 million to $750 million in bonds
or debt papers this year. This would be on top of its $1 billion
global bond issuance in January.
Portfolio investments in May posted a net
outflow of $158.1 million, higher than the $49.9 million net outflow
in April driven by the negative investor sentiment arising from
spiraling prices of oil and other commodities, the economic
slowdown, reports of mixed corporate earnings, and a weakening peso.
For the first five months of the year, net
foreign portfolio investments posted an outflow of $271.8 million
versus the $1.7 billion net inflow for the comparable period last
year.
The BSP earlier lowered its forecast for the
country’s balance of payments (BOP) surplus to $2.5 billion this
year from an earlier forecast of $3.4 billion.
The BOP summarizes a country’s economic
transactions with the rest of the world to include its external
trade, income transfers and other payments.
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