BSP Sees the Arrival of More Foreign Investments in the Philippines
The Bangko Sentral ng Pilipinas (BSP) sees more foreign direct investments (FDI) and speculative funds arrive in the Philippines in the next two years following the structural reforms done by the government.
According to the officer-in-charge of the BSP’s Monetary Policy Sub-Sector, Dennis Lapid, he expects FDI net inflows to increase up to $11 billion this year and $12 billion next year. Lapid added that foreign portfolio investments or hot money is expected to have an increased net inflow of $2.5 billion in 2023 and $3.5 billion in 2024.
Lapid discussed, “This is driven mainly by the better than earlier anticipated actual data for key BOP (balance of payments) accounts. These include [the] latest data on the FDIs, business process outsourcing, and the tourism and travel-related accounts.”
The central bank expects an increase in business process outsourcing (BPO) earnings at 9% in 2023 and 2024. Moreover, tourism receipts are expected to grow by 80% this year and 50% in 2024 after the surge of tourists last year following the lifting of strict COVID-19 quarantine and lockdown protocols.
Lapid noted that the BSP sees growth in goods exports by 3% while an increase in goods imports is at 4% this year.
Lapid explained, “For 2024, the overall BOP position is anticipated to remain in deficit territory with a smaller deficit than in the previous forecast, consistent with the normalization of global and domestic economic activity.”
Lapid cited that the multilateral lender International Monetary Fund (IMF) expects an eased growth of 2.4% this year and 3.4% next year. Lapid added that the sustained build-up of international reserves is expected to strengthen the positive investor sentiment and bring in investment flows.
The BSP expects the gross international reserves (GIR) to go back to the $100 billion level this year and $102 billion next year.