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December 11, 2008

Philippines’ FDI inflows decline 45% in Jan-Sept

Net foreign direct investment inflows into the Philippines dropped 45 percent in the nine months to September as caution reigned amid the global economic slowdown, Reuters quoted the central bank as saying Wednesday.

Net FDIs amounted to $1.38 billion from January to September, compared with $2.5 billion in the same 2007 period, despite an almost ten-fold increase in net FDIs to $311 million in September alone from a year earlier.

"Lower net FDI inflows during the period January-September 2008 ensued as lingering global financial uncertainties led foreign investors to stay on the sidelines and wait for more stable market conditions," the central bank said in a statement.

Net inflows of foreign equity capital also fell 56 percent to $823 million in the nine-month period, from $1.86 billion a year earlier, while the other capital account -- mainly loans to local units from their foreign parent -- slipped more than 50 percent to $204 million.

In June, the central bank slashed its 2008 net FDI forecast to $2.6 billion from an earlier estimate of $4.2 billion, reflecting a 3.7 percent slide from last year's $2.7 billion.

FDI inflows, along with remittances from overseas Filipino workers, are an important source of foreign exchange for the Philippines as they help keep the country's balance of payments (BOP) in surplus.

However, weaker exports would narrow the country's BOP surplus to below $2 billion for the year, the lowest since 2004, compared with a surplus of $8.58 billion last year, the central bank previously said.

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