Philippines’ hot money outflow continues

The Philippines’ hot money outflow continues to be a cause for concern for the country’s economy. Hot money refers to short-term investments in stocks, bonds, and other financial instruments that can easily be moved in and out of a country.

According to the Bangko Sentral ng Pilipinas (BSP), the country’s central bank, the Philippines recorded a net outflow of $1.3 billion in hot money in the first quarter of 2021. This is a significant increase from the $961 million net outflow recorded in the same period last year.

The continued outflow of hot money is attributed to several factors, including the ongoing COVID-19 pandemic, political uncertainties, and the country’s economic performance. The Philippines has been struggling to contain the spread of the virus, which has led to lockdowns and restrictions on businesses, affecting the country’s economic growth.

Political uncertainties have also been a cause for concern, with the country’s president, Rodrigo Duterte, facing criticism for his handling of the pandemic and human rights issues. This has led to concerns among investors about the stability of the country’s political environment.

The country’s economic performance has also been a factor in the outflow of hot money. The Philippines’ gross domestic product (GDP) contracted by 9.6% in 2020, the worst performance in the country’s history. This has led to concerns about the country’s ability to recover from the pandemic and attract foreign investments.

The BSP has been taking measures to address the outflow of hot money, including the implementation of a new framework for managing foreign exchange risks. The central bank has also been working to improve the country’s economic fundamentals, including reducing inflation and improving the country’s fiscal position.

Despite these efforts, the outflow of hot money continues to be a challenge for the Philippines’ economy. The country will need to address the underlying issues that are driving the outflow of hot money, including the pandemic, political uncertainties, and economic performance, to attract long-term investments and promote sustainable economic growth.