FDI net inflows reach $443 million in January

MANILA – Net inflows of foreign direct investments (FDIs) fell to USD443 million in January, significantly lower than the USD1.5 billion recorded in the same month last year, as geopolitical risks continued to weigh on investor sentiment, the Bangko Sentral ng Pilipinas (BSP) said Friday.

FDIs include investments made by a non-resident direct investor in a resident enterprise, where the investor owns at least 10 percent equity, and investments made by non-resident subsidiaries or associates in their resident direct investor.

The investments can be in the form of equity capital, reinvestment of earnings and borrowings.

The BSP said Japan remained the top source of FDIs during the period, with most inflows channeled into the manufacturing, real estate and wholesale and retail trade sectors. Other major sources included the United States and South Korea.

Carlo Asuncion, chief economist at Union Bank of the Philippines, said the decline reflects sustained caution among investors.

"The weaker FDI inflow in January likely reflects continued investor caution amid elevated geopolitical risks, tight global financial conditions, and uncertainty over the global growth outlook, which appear to have weighed on intercompany funding flows," he said.

"Going forward, the ongoing Middle East tensions add to downside risks for FDI, as they could prolong volatility in energy prices and further dampen investor sentiment, suggesting near‑term inflows may remain uneven." (PNA)