BSP sees lower ‘hot money’, FDI inflows

The Bangko Sentral ng Pilipinas (BSP) has lowered the projected inflows of foreign direct investments (FDIs) and foreign portfolio investments or “hot money” this year due to sovereign debt crisis in Europe and economic uncertainty in the US.

BSP deputy governor Diwa Guinigundo said in a press conference that the Monetary Board decided to reduce the projected inflow of hot money to $4.5 billion instead of $5.7 billion this year and the FDI inflow to $1.2 billion instead of $2 billion.

Guinigundo said the downward revisions in the projected foreign portfolio and FDI inflows took into consideration latest external developments particularly in Europe and the US.

He told reporters that the projected

foreign portfolio inflows in shares listed at the Philippine Stock Exchange (PSE) was reduced to $1.1 billion instead of $3 billion due to the impact of the spillover of the Euro debt crisis.

On the other hand, the target for foreign portfolio inflows in peso- denominated government securities was raised to $3.4 billion instead of $2.7 billion on the back of higher bond fl otation by private corporations.

Latest data showed that the net inflow of hot money or speculative investments plunged 56.3 percent to $878.7 million in the first five months of the year from $2.01 billion in the same period last year.

Inflows from January to May declined by 9.7 percent to $7.03 billion while outflows climbed by 6.5 percent to $6.15 billion.

Guinigundo said the projected FDI inflow was also lowered by $800 million to $1.2 billion instead of $ 2 billion this year as investors continued to adopt a wait-and-see attitude due to the lingering impact of the debt debacle in Europe and the global fragile economic growth in advanced economies led by the US.

Data from the central bank showed that FDI inflows jumped 72.4 percent to $850 million in the first quarter of the year.

The Philippines booked the fastest gross domestic product (GDP) growth in Southeast Asia, expanding by 6.4 percent in the first quarter of the year.