MANILA – Foreign Direct Investments (FDIs) into the Philippines will likely increase further in the coming months due in part to the recent upgrade of the country’s credit rating as well as the decline in inflation last June.
This was noted by Bangko Sentral ng Pilipinas (BSP) governor Benjamin Diokno following the increase of net FDIs last April to USD961 million from the previous month’s USD586 million net inflows.
“If you look at the data globally, it’s (FDIs) been declining. Ours is increase so that shows confidence,” he told journalists Wednesday.
Last April, S&P Global Ratings upgraded its investment rating on the Philippines to “BBB+,” a notch away from A rating, with Stable outlook because of the sustained expansion of the domestic economy, heathy external position and sustainable public finances.
This happened about a year after the debt rater changed its ratings outlook on the country’s then “BBB” rating from Stable to Positive.
Relatively, rate of price increases last June declined to 2.7 percent from 3.2 percent due to slower inflation rate of most indices such as the heavily-weighted food index.
Domestic inflation peaked at 6.7 percent in September to October last year due to faster food inflation rate, particularly on rice because of supply issues.
However, the government has put in place several measures to increase rice supply, thus, the decline of inflation rate.
Authorities believe that the uptick last May, from the previous month’s, three percent, is a “one-off situation.”
BSP, on Wednesday, reported that all FDI components posted increases in the fourth month this year but the net inflows last April is 11.8 percent lower than year-ago’s USD1.1 billion net inflows.
In the first four months this year, net FDIs stood at USD2.9 billion, 14 percent lower than the USD3.4 billion net inflows same period in 2018.
Diokno said increase of net FDIs last April, relative to the previous month, shows “renewed confidence” among investors.
“Actually, the confidence is increasing,” he said, citing the latest approval rating of President Rodrigo R. Duterte, which increased to +68 based on the survey of the Social Weather Stations (SWS) for the second quarter of the year.
Diokno dubbed as “fantastic” the improvement of the President’s net satisfaction rating, adding that “we’re doing great.” (PNA)