Net inflows of brick-and-mortar foreign direct investment (FDI) into the Philippines declined by 17 percent to $1.72 billion in the first quarter of 2026 from $2.07 billion in the same period in 2025, as global uncertainty weighed on investor sentiment and prompted caution.

The first-quarter FDI total marked the lowest level for the period in six years, or since the $1.64 billion recorded in the first three months of 2020 at the onset of the Covid-19 pandemic.

The latest Bangko Sentral ng Pilipinas (BSP) data released on Wednesday, June 10, showed that the contraction was primarily driven by a 22.7-percent decline in net investments in debt instruments, particularly intercompany borrowings, which fell to $1.18 billion from $1.52 billion a year ago. Debt instruments typically account for the largest share of FDI inflows.

The three-month figure followed a difficult 2025, when net FDI inflows plunged to $7.79 billion—the lowest level in a decade, excluding the pandemic slump—from $9.4 billion in 2024.

During the quarter, the net equity capital component, excluding reinvested earnings, increased by 13.1 percent to $337 million from $298 million a year ago. However, reinvested earnings declined by 17.9 percent to $206 million from $251 million.

Robert Dan Roces, group economist at Sy-led conglomerate SM Investments Corp. (SMIC), said the lower FDI inflows in the first quarter did not indicate “a sharp deterioration in sentiment toward the Philippines” but instead reflected investor caution amid global uncertainty.

Despite the overall decline during the quarter, March showed signs of recovery, with net FDI inflows rising to $611 million, more than a quarter higher than the $485 million recorded in the same month last year.

The increase was driven by gains across all components, including a 62.1-percent surge in net equity capital, excluding reinvested earnings, and a 26-percent rise in reinvested earnings.

The BSP said the leading sources of equity capital placements during the first three months of the year were Japan, the United States (US), and Singapore.

These investments were channeled mainly into the manufacturing, financial and insurance, and real estate sectors.

FDI refers to cross-border investments in which a nonresident investor owns at least 10 percent of the equity in a local enterprise. It consists of equity capital, reinvested earnings, and intercompany borrowings. The BSP reports FDI statistics in net terms, or placements less withdrawals.

According to Roces, delays or postponements in investment projects can have a noticeable effect on the data, resulting in uneven month-to-month inflows.

“Moving forward, inflows may gradually pick up if and when financing conditions improve, but competition for investment remains strong, making execution, policy stability, and infrastructure delivery increasingly important in turning interest into actual investments,” Roces said.