MANILA -The Bangko Sentral ng Pilipinas (BSP) has downgraded its growth forecasts this year for foreign direct investments (FDI) and ‘hot’ money inflows, taking into account the actual performance for the first half of the year as well as the latest global and domestic growth prospects.
Sittie Hannisha Butocan, director of the BSP’s economic research department, said in a press briefing that net FDI inflow is now seen settling at $10.5 billion instead of $11 billion. Net inflows of hot money, on the other hand, is now predicted at $3 billion instead of $3.5 billion.
The BSP also expects the 2023 deficit in the country’s balance of payments (BOP) to narrow at just $100 million from the $1.2 billion forecast in June, amid better prospects in the outsourcing sector and tourism and lackluster global trade.
High interest rates
In March, the Monetary Board, which governs the BSP, was expecting the full-year BOP deficit at $1.6 billion considering the outlook of slower economic activities worldwide.
READ: BSP trims ’23 BOP deficit forecast to $1.2B
Exports are now expected to decrease by 4 percent instead of growing by 1 percent as forecast three months ago.
At the same time, imports are now expected to shrink by 3 percent instead of increasing by 2 percent.
“The lingering high interest rate environment have further impeded trade and investment decisions, thus, adding another layer of uncertainty to the BOP outlook for the year,” Butocan said.
READ: Philippine central bank ready to raise rates if necessary – governor
Butocan said the revised forecast was consistent with the emerging trend observed in most economies, in terms of trade in commodities.
“Like in most emerging markets, Philippine merchandise trade performance for the first half of the year has been on a declining trend as the recovery path of external demand has stalled amid elevated inflation, lingering geopolitical tensions, and rising trade barriers, among others,” she added.
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