FDI inflows fall to five-year low

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March 12, 2026 | 12:00am

MANILA, Philippines —  Foreign direct investment (FDI) inflows into the Philippines dropped to their lowest level in five years in 2025, as investors turned cautious amid global uncertainties and shifting financial conditions.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed that net FDI inflows slumped by 17 percent to $7.8 billion last year from $9.4 billion in 2024.

The 2025 level marked the lowest full-year FDI inflow since the $6.82 billion posted in 2020, at the height of the pandemic. Still, the figure surpassed the BSP’s $7 billion projection for the year.

Equity capital placements mainly came from Japan, the United States, Singapore and South Korea, with investments largely channeled into manufacturing, wholesale and retail trade as well as financial and insurance industries.

In terms of components, net investments in debt instruments accounted for the bulk of inflows at $5.27 billion, followed by equity capital placements of $1.32 billion and reinvested earnings amounting to $1.2 billion.

Equity placements stood at $1.98 billion in 2025, while withdrawals reached $660 million. Equity and investment fund shares also hit $2.52 billion last year.

For December alone, FDI net inflows jumped by 31.1 percent to $560 million from $427 million in December 2024. However, it represented the lowest monthly level in three months or since the $316 million seen in September 2025.

The BSP said Japan was the largest source of foreign investments in December, with most inflows directed to financial and insurance activities.

SM Investments Corp. group economist Robert Dan Roces said the softer inflows at the end of 2025 likely reflected typical seasonal factors as well as cautious investor sentiment. Geopolitical risks could also be weighing on investor appetite.

“While the Iran conflict adds uncertainty through higher oil prices and market volatility, we still expect FDI to gradually recover in 2026, particularly in manufacturing, renewable energy and logistics, as global financial conditions ease and supply-chain diversification continues,” he said.

The BSP forecasts FDI inflows into the Philippines to reach $7.5 billion this year.