NET foreign direct investments (FDIs) fell by nearly 40 percent in January 2026 as geopolitical concerns weighed on sentiment, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.
Net inflows for the month totaled $443 million, 39.2 percent lower than the $749 million seen a year earlier and also down from $560 million in December 2025.
“This suggests that rising geopolitical risks are weighing on investor sentiment,” the BSP said in a statement.
Economists warned that the FDI picture was unlikely to improve given heightened uncertainties arising from the US-Israel war on Iran.
Nonresidents’ investments in equity capital (other than reinvestment of earnings) plunged by 19.9 percent to $70 million at the start of the year from $88 million in January 2025, BSP data showed.
Reinvestment of earnings dropped by a much larger 56.8 percent to $53 million from $122 million.
Investments in debt instruments fell 38.4 percent to $320 million compared to $519 million in the same month last year.
Japan was the top source of FDIs, with inflows mostly directed to the manufacturing industry, the BSP said.
Aside from Japan, the United States and South Korea also drove equity capital placements, which were mostly channeled into manufacturing, real estate, and wholesale and retail trade.
UnionBank of the Philippines chief economist Carlo Asuncion concurred with the BSP’s view, saying the drop in net FDI was likely due to investor conservatism amid increased geopolitical risks, tight global financial conditions and uncertainty about global growth prospects.
He added that the war in the Middle East was increasing future FDI risks due to energy price volatility. Near-term inflows may remain uneven, he said.
Rizal Commercial Banking Corp. chief economist Michael Ricafort also tagged geopolitical risk factors but said the FDI decline — the lowest in four months — could be attributed to investor sentiment having been affected by a massive flood control project scandal.
