SHORT-term investments made by foreign investors showed a slight recovery in the second week of June, but total investments remain at a negative for most of the first half of the year.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed foreign portfolio investments (FPI) posted a net inflow in the second week of June at $156.37 million—as more investments flowed inside the country than what was pulled out during the period.
During the week, about $527.02 million was invested to the country in terms of short-term portfolio instruments, more than offsetting the $370.65 million that was pulled out of the country during the period.
FPI are more popularly known as “hot” or “speculative” money, because they are easily pulled in and out of the local platforms in slight changes in global and local sentiment. Among economic developments that affected the Philippines during the period include Qatar’s row with neighboring countries. Notable, too, are pronouncements by international credit watchers that lauded the country’s passage of the tax-reform program in the Lower House.
Despite the recovery, the total short-term investments to the Philippines remained at the negative territory from January 1 to June 9 this year, at a net outflow of $387.42 million.
The negativity of short-term investments is a reversal from the previous year’s level of $236.68 million net inflow. The total inflow during the period was at $6.91 billion and fell short to cover the $7.3 billion total outflow during the period.
Earlier this month, international think tank Capital Economics said investments are also at a risk not only in the near-term but in the medium term as well, due to the President’s rhetoric on politics and controversial policies.
“The bigger risks are over the medium term. The Philippines’s own history shows how poor leadership and political uncertainty can hold back an economy,” Capital Economics said, citing one of the key achievements of Duterte’s predecessor, Benigno S. Aquino III, was the restoration of political stability.
“However, there are signs that this is being put at risk by Duterte,” it added. “The stock market has underperformed, inflows have dropped, while pledges of foreign direct investment have fallen. If investment starts to slow sharply, medium-term growth prospects will suffer.”