October 13, 2026 | 9:31 pm
FOREIGN DIRECT INVESTMENT (FDI) net inflows into the Philippines reached a six-month high in July despite falling by more than 40% year on year amid global uncertainty, preliminary Bangko Sentral ng Pilipinas (BSP) data showed.
FDI yielded a net inflow of $689 million in July, plunging by 44.1% from the $1.233 billion recorded a year ago.
This was the highest monthly inflow in six months or since the $799 million in January but marked the first annual decline since April.
“The sharp year-on-year decline in July FDI inflows likely reflects a high base effect from a particularly strong inflow in the same month last year, as well as continued investor caution amid global economic uncertainties, elevated financing costs, and lingering geopolitical risks,” Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in a Viber message.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the annual slump in FDIs to weak economic growth, red-hot inflation, and elevated interest rates.
Month on month, however, FDI net inflows surged by 54.1% from $447 million.
For Mr. Asuncion, the month-on-month rebound likely reflected continued investment activities as well as the resumption or launch of some projects after previous delays.
John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, also noted that the month-on-month climb of net inflows is encouraging for the country’s investment climate.
“The month-on-month increase in FDI is an encouraging sign, possibly reflecting renewed investment activity and the timing of intercompany financing and equity placements,” he said via Viber.
FDIs refer to cross-border investments in which a nonresident investor holds at least 10% equity in a resident enterprise. These may take the form of equity capital, reinvestment of earnings and intercompany borrowings.
Central bank data showed investments in equity and investment fund shares declined by 37.3% to $324 million in July from $517 million in the same month last year.
Nonresidents’ investments in net equity capital other than reinvestment of earnings also plummeted by 55.5% to $186 million in July from $418 million a year earlier.
This came amid a 56.7% year-on-year slide in equity capital placements to $199 million from $460 million, and a 69% slump in withdrawals to $13 million from $42 million.
Meanwhile, reinvestment of earnings amounted to $138 million in July, up by 39.9% from $99 million a year ago.
However, net investments in debt instruments fell by an annual 49.1% to $365 million from $717 million.
These consisted mainly of intercompany borrowing or lending between foreign direct investors and their subsidiaries or affiliates in the Philippines, according to the central bank. The rest are investments made by nonresident subsidiaries or associates in their resident direct investors or known as reverse investment.
SEVEN-MONTH INFLOWS
In the seven months to July, FDI net inflows fell by 23.9% year on year to $4.071 billion from the $5.35 billion logged previously.
“The decline reflected lower net inflows across all major FDI components,” the central bank said in a statement released late on Monday.
As of July, investments in equity and investment fund shares slid by 11.3% to $1.643 billion from $1.852 billion in the same period in 2025.
Net foreign investments in equity capital, excluding reinvestment of earnings, dropped by 6.9% to $675 million in the seven-month period from $725 million.
Broken down, placements went down by 23.4% annually to $924 million as of July from $1.206 billion a year ago, while withdrawals slumped by 48.2% to $249 million from $481 million.
“Capital placements came primarily from Japan, the United States, and Singapore,” the BSP said. “These funds were channeled largely into the manufacturing, financial and insurance, and real estate industries.”
BSP data also showed reinvestment of earnings stood at $968 million in the seven-month period, falling by 14.2% from $1.127 billion a year earlier.
Net investments in debt instruments likewise slumped by 30.6% to $2.428 billion as of July from $3.498 billion.
Mr. Asuncion said FDI inflows may remain volatile as lingering global woes and domestic headwinds continue to weigh on investor sentiment.
“Looking ahead, FDI inflows could remain uneven in the coming months as investors continue to weigh global growth prospects, interest rate developments in major economies, and geopolitical conditions,” he said.
Mr. Asuncion also cited the Philippines’ growth outlook, infrastructure investments, ease of doing business reforms, macroeconomic stability, and exchange rate movements as factors that may influence investment sentiment.
“While near-term volatility may persist, the country’s favorable demographics, expanding consumer market, and ongoing investment promotion efforts should continue to provide support for longer-term FDI prospects,” he added.
According to Mr. Rivera, the country must also ensure foreign investments translate into actual capital inflows and jobs.
“FDI could gradually improve as investment commitments materialize, although sustained recovery will depend on policy predictability, infrastructure readiness, and investor confidence,” he said. “(They) need to translate investment approvals into actual capital inflows and jobs.”
For this year, the central bank sees FDI net inflows sliding to $6.5 billion from $8.1 billion last year.
The BSP’s FDI data reflect actual investment flows. This differs from the Philippine Statistics Authority’s approved foreign investment data, which represent investment commitments that may not necessarily be realized within the reference period. — Katherine K. Chan
Leave a comment