Foreign investments seen to bounce back strongly in 2009

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Foreign investments seen to bounce back strongly in 2009
« on: September 25, 2008, 05:26:03 PM »
By Des Ferriols

Foreign investments are expected to bounce back strongly in 2009, with
portfolio inflows reaching $1.4 billion and direct investments soaring
to $3.2 billion as confidence and sentiments recover from this
year's crisis.

The Bangko Sentral ng Pilipinas (BSP) said yesterday that portfolio
investments are expected to post a dramatic recovery from the projected
$700-million net inflow this year.

A strong resurgence in foreign direct investments is also expected in
2009, with the full-year total increasing by 23 percent from the
$2.6-billion level expected this year.

BSP Governor Amando M. Tetangco Jr. said the coordinated action of
central banks in advanced economies to stabilize the global financial
market is expected to calm fears of troubles spiralling out of control.

According to Tetangco, these actions, together with steps being taken by
financial institutions themselves, are expected to spur at least a mild
recovery in much of the global market.

"At the very least it will lessen risk-aversion, " he said.

Tetangco said the domestic conditions also points to a relatively stable
macro-economic condition despite the challenges of the financial
environment.

Tetangco said continued public investments in infrastructure are
expected to have the desired effect of spurring economic activities
which would support further improvements in the government's fiscal
conditions.

"Our well-capitalized banking system, among others, would likewise
provide support to the view of steady investor confidence," Tetangco
added.

In mining, Tetangco said the BSP expects fresh foreign direct
investments of at least $1 billion that would come into the country in
2009.

Around $700 million worth of FDI is expected to flow into the
manufacturing sector, bolstered by the anticipated recovery in global
demand for consumer goods.

After taking serious beating this year, portfolio investments are also
projected to gather momentum in 2009 and recover some of its lost
ground, due mainly to milder risk-aversion.

Tetangco said the BSP expects investments in equities and borrowing and
behind this renewed confidence was the action being taken by central
banks. By 2009, these actions would have already taken root and provided
some stability to the global financial environment which would encourage
portfolio investments to return to emerging markets like the
Philippines.

Before bouncing back in 2009, however, foreign direct and foreign
portfolio investments would suffer this year, with hot money inflow
falling below $1 billion to only $700 million this year, from
$3.5-billion level in 2007.

The BSP's original foreign direct investment projection for 2008 was
$4.2 billion but this had to be trimmed down to $2.6 billion to reflect
delayed projects as investors awaited more developments in the global
economy.