Foreign direct investment (FDI) net inflows into the Philippines plunged to $210 million in May, the lowest monthly total in more than 11 years as global economic volatility and geopolitical tensions prompted foreign companies to delay capital commitments.

According to the latest data from the Bangko Sentral ng Pilipinas (BSP), released on Monday, Aug. 10, the May figure represents a 64.7 percent contraction from the level recorded in May 2025 and falls below the previous record low of $200.43 million seen in March 2015.

The sharp monthly drop dragged total net inflows for the first five months of 2026 to $2.18 billion, a 33.4 percent decline from the $3.27 billion recorded in the same period last year.

According to the BSP, the cumulative decline was “driven by lower foreign net investments in debt instruments and reinvestment of earnings, which more than offset the increase in net equity capital investments (other than reinvestment of earnings).”

The central bank added that this trend “reflected lower intercompany borrowings from foreign direct investors and reduced earnings retained for reinvestment during the period.”

Among its components, the primary driver of the May shrinkage was the sharp fall in net investments in debt instruments, which tumbled 92.1 percent to $35 million from $440 million a year earlier.

As of end-May, debt instruments—which “consist mainly of intercompany borrowing or lending between foreign direct investors and their subsidiaries or affiliates in the Philippines”—totaled $1.25 billion, dropping by nearly half from the $2.48 billion recorded in 2025.

This five-month performance follows a challenging 2025, during which annual net inflows plunged to $7.79 billion from $9.40 billion in 2024. The BSP forecasts inflows to clock in lower at $7 billion before rebounding to $8 billion in 2027.

Despite the overall slump, the net equity component (excluding reinvestment of earnings) continued to show resilience. During the five-month period, this segment expanded by roughly 50 percent to reach $541 million, up from $364 million the previous year.

Meanwhile, reinvestment of earnings during the five-month period fell by 9.7 percent to $383 million, down from $424 million a year ago.

Equity capital placements during the first five months were sourced primarily from Japan, the United States, and Singapore. These investments were channeled largely into the manufacturing, financial and insurance, and real estate industries.

FDI refers to cross-border investments where a non-resident investor owns at least 10 percent of the equity in a local enterprise; it consists of equity capital, reinvested earnings, and intercompany borrowings. These statistics track actual investment inflows reported in net terms (placements less withdrawals).

Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said investors during the month “remained cautious amid heightened geopolitical tensions, trade uncertainties, and volatile financial markets, leading many firms to delay or scale back investment decisions.”

Domestically, Ravelas noted that investors are watching for catch-up efforts the government is expected to deploy following muted performance since the second half of 2025.

Clearer signals are expected on “policy execution, infrastructure rollout, power costs, and the overall ease of doing business.”

Overall, Ravelas assessed the decline to be driven “more by investor caution than a loss of confidence in the Philippines,” adding that current trends signal selective investing rather than capital flight.

“Looking ahead, FDI flows are likely to remain uneven in the near term as global uncertainty persists,” Ravelas said. “However, as interest rates continue to ease globally and supply chain diversification trends continue, the Philippines remains well-positioned to attract investments in manufacturing, logistics, digital infrastructure, renewable energy, and services.”