(File photo)
MANILA – Further reopening of the domestic economy and roll-out of coronavirus disease (Covid-19) vaccines are expected to help pique investors’ interest to the Philippines and address the outflows in foreign portfolio investments.
This, after the country registered net outflows amounting to USD4.24 billion on foreign portfolio investments, otherwise known as hot money due to the speed it comes in and out of an economy, as of end-2020.
The end-2020 figure is higher than the USD1.9 billion net outflows in the previous year and Bangko Sentral ng Pilipinas (BSP) traced this partly to the impact of the pandemic.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort, in a report said, measures to address the pandemic’s impact such as the development and deployment of Covid-19 vaccines, pick-up in economic activities as movement restrictions are eased, sustained near-record low interest rates, and eventual approval of various measures in Congress like the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) bill are seen to improve economic recovery prospects and entice more foreign investments.
He said any decline in domestic Covid-19 infections provides “further traction that helps improve investment valuations, as well as help improve the net foreign portfolio investments data.”
“Further re-opening of the economy from lockdowns helps address many important economic/business issues on jobs/employment (less dependence/less strain on government assistance programs), continuation/growing concern of businesses (prevention of business closures/job losses), pick up in government tax revenue collections (so there will be more government funds for various Covid-19 programs/stimulus measures), thereby providing more sustainable solutions to the economic/business challenges largely brought about by Covid-19,” he said.
Ricafort added that recent positive ratings decision on the Philippines further supports sentiments on the domestic financial market “as these fundamentally reflect the Philippines' improved economic and credit fundamentals that may structurally help attract more foreign investments into the country, as a sign of resilience despite the economic challenges largely brought about by the Covid-19 lockdowns/pandemic that caused credit rating downgrades in some countries around the world”. (PNA)
