INVESTORS are growing more cautious amid global and domestic uncertainties, as the country’s net foreign direct investments (FDI) dropped by 24 percent in the first seven months of the year, data from the Bangko Sentral ng Pilipinas (BSP) showed late Monday.
Inflows in the January to July period totaled $4.07 billion, down 23.9 percent from the $5.35 billion posted in the same period last year. In July alone, net FDI inflows were recorded at $689 million, down 44.1 percent from the $1.23 billion posted in the same month last year. It is, however, slightly higher than last month’s $447 million. Union Bank chief economist Ruben Carlo Asuncion said the decline likely reflected a “combination of external and domestic factors.” “Global investors have generally become more cautious amid elevated US interest rates, dollar strength, and recurring geopolitical and trade-related uncertainties, which tend to reduce risk appetite toward emerging markets,” Asuncion said. He added that “peso weakness, market volatility, and concerns over growth momentum” may have also weighed on sentiment. To date, equity capital placements dropped by 6.9 percent to $675 million from $725 million in January–July 2025, while reinvestments of earnings dropped by 14.2 percent to $968 million from $1.13 billion. Net investments in debt instruments also slumped by 30.6 percent to $2.43 billion from $3.49 billion. In July alone, non-residents’ net investments in debt instruments dropped to $365 million from June’s $369 million and July 2025’s $717 million. Reinvestment of earnings, meanwhile, rose to $138 million, up 39.9 percent from $99 million in July 2025. It was also higher than the $130 million recorded a month earlier. Equity capital placements, however, markedly dropped 55.5 percent in July to $186 million from $418 million a year earlier. It was, however, a reversal from the month earlier’s $52 million outflow. The January–July placements originated mostly from Japan, the United States, and Singapore, the BSP said, with the top recipient sectors being manufacturing, financial and insurance, and real estate industries. Looking ahead, Asuncion said he would be “cautious about extrapolating the current pace of outflows through the rest of 2026.” “While outflows could remain elevated in the near term, their trajectory will likely depend on whether external conditions become more supportive and whether investor confidence in the Philippines’ growth and policy outlook improves,” Asuncion said. The central bank expects net FDI to hit $7.0 billion this year and $8.0 billion in 2027. The BSP’s FDI figures differ from those of other government agencies in that these cover actual investments. The Philippine Statistics Authority, in contrast, publishes approved foreign investments — commitments that may not be realized.
