The Philippines is projected to face “mounting headwinds” in attracting foreign direct investment (FDI) through 2026 amid a domestic flood control corruption scandal, external uncertainties and global trade tensions, according to a report from Fitch Solutions unit BMI.
The global insights company noted that FDI inflows as a share of gross domestic product (GDP) slipped to 1.3 percent in the second quarter of 2025, which preceded the corruption issue raised in the State of the Nation Address in July.
Recently released data from the Bangko Sentral ng Pilipinas underscored these concerns, showing net FDI inflows slumped 40.5 percent year-on-year to $494 million in August 2025. BMI said this compounded investor concerns about global trade uncertainty and showed signs of further deterioration ahead.
The corruption scandal also contributed to the weakness of the Philippine peso against the US dollar. BMI expects the peso to close the year at around P59 against the greenback, before slightly depreciating further to P59.50 by end-2026.
The local currency weakness is expected to provide modest support to the trade balance in 2026. BMI anticipates this will narrow the current account deficit only slightly from 3.4 percent of GDP in 2025 to 3.2 percent in 2026.
It said the deficit remains significantly wider than the pre-pandemic average of a 0.4 percent deficit recorded between 2015 and 2019.
Latest data showed the current account deficit narrowed year-on-year to 3.1 percent of the GDP in the first half of the year, which BMI attributed to the resilience of merchandise exports with an average growth rate of 13.1 percent in the first three quarters of 2025.
It said the 19 percent US ‘reciprocal’ tariff effective from August 2025 appears to have begun weighing on Philippine exports. Third-quarter shipments to the US, a top trading partner, fell by 0.3 percent year-on-year.
 through 2026 due to the flood control corruption scandal, global trade tensions, and external uncertainties.){kind=link}