by Alito L. Malinao
MANILA, Sept. 11 (Xinhua) -- The Philippine economy, one of the fastest growing economies in the region, has lately suffered some setbacks, with falling inflow of foreign direct investment (FDI) and rising jobless rate.
In a report on Tuesday, the Bangko Sentral ng Pilipinas, the country's central bank, said that the country's FDI hit a net outflow of 61 million U.S. dollars in June, a reversal from the net inflow of 307 million U.S. dollars in the same month last year.
The decline in the inflow of FDI into the country was the result of the tapering by the U.S. Federal Reserve of its stimulus program that involves huge bond purchases which, in turn, was the result of a gradually improving U.S. economy.
But economic managers here said that in the long run, the full recovery of the U.S. economy would be beneficial for the Philippines and other emerging economies since the United States is still the world's biggest export markets and is home to a huge population of migrant workers.
According to the BSP, net outflow of FDI in June, however, was not enough to pull down first semester figures. The Philippines still managed to record a net FDI inflow of 2.19 billion U.S. dollars in the first half, up by nearly 11 percent from 1.97 billion U.S. dollars in the same period last year.
"This reflected the favorable sentiment of investors on the Philippine economy on the back of strong macroeconomic fundamentals," the BSP said.
Aside from the decline in FDI, the country's unemployment rate also rose in July from a year ago despite a robust economic growth.
The National Economic and Development Authority (NEDA), however, explained that the increase in the jobless rate was due to an unusual jump in the entrants to the labor force.
NEDA, the highest economic policy-making agency in government, said that while the number of jobs created was substantial the increase in the number of new workers was even more significant.
According to the National Statistics Office (NSO), which is under the NEDA, the unemployment rate stood at 7.3 percent in July, up from 7 percent in the same month last year. The latest figure, nonetheless, was better than the 7.5 percent registered in April this year.
The NEDA said that the labor force increased by 786,000 from 40. 39 million in July last year while only 620,000 additional jobs were created during the period.
NEDA Director General Arsenio Balisacan acknowledged that the labor situation in the country, as reflected by the unemployment and underemployment rates, indicated that efforts at creating more jobs had to be sustained.
On investments, Balisacan said that while the Philippines still lags behind its neighbors in terms of FDI, there was a good chance FDI will substantially rise over the medium term because of rising investments by local firms.
Balisacan said that sustained domestic investments should entice more foreigners to do business in the Philippines.
"Previously, even domestic investments were small. Now, investments by domestic firms are growing. Eventually this will help boost FDIs," Balisacan said.
The Philippines has become one of the fastest-growing economies in Asia after its economy expanded by 6.8 percent last year and by 7.6 percent in the first semester of this year. Last year's economic growth breached the government's target of 5 to 6 percent.
Growth in the first semester kept the economy poised to exceed the target of 6 to 7 percent for this year.
But global developments could stymie government efforts in sustaining the overall growth of the economy.
For example, there are now fears that the country's inflation rate could rise in the days ahead with the rising prices of imported petroleum products caused by the tension in the Middle East.
After dropping to a four-year low in August, inflation may accelerate in the months ahead.
Balisacan said that rising prices of petroleum in the world market and the peso's fall against the U.S. dollar will soon impact on overall domestic prices.
Talks of a possible U.S. military attack on Syria have fuelled speculations of disruption in the oil supply from the Middle East, thereby pushing global oil prices.
Also, the depreciation of the peso has been tagged as the reason why capital is being drawn away from local shores.
The peso last month fell to the 44-to-a-dollar territory, and has so far stayed in that level while portfolio funds, largely in stocks, continued to be pulled out of the country.
"But even if inflation goes back to 3 percent, that will still be very manageable," Balisacan said. In August, inflation fell to a four-year low of 2.1 percent. This brought the average for the first eight months of the year to 2.8 percent.