FDI inflows slumped to 5-year low in 2025
Foreign direct investments (FDI) in the Philippines fell to pandemic-era low in 2025, finishing a year marred by global trade tensions and domestic governance concerns that unsettled investors.
FDI inflows had beaten outflows by $7.8 billion last year, the Bangko Sentral ng Pilipinas (BSP) reported. Those net inflows, however, were 17.1-percent lower than in 2024 and the weakest since 2020, back when the COVID-19 pandemic had pushed down FDIs to $6.8 billion.
Even so, the total exceeded the central bank’s forecast of a $7 billion net inflow for 2025.
Unlike foreign portfolio investments, which can vanish at the first sign of trouble, FDI tends to represent longer-term commitments that create jobs and support industrial growth.
The government has been working both to attract new investment and retain those already in the country.
There was little year-end momentum. In December 2025, FDI net inflows amounted to $560 million, up by 31.2 percent from a year earlier but the lowest level in three months.
The latest figures reflected investor caution as the Philippine economy confronted challenges on multiple fronts.
Gross domestic product expanded just 4.4 percent last year, missing the government’s target. Officials and analysts pointed to a mix of climate-related disruptions and the Marcos administration’s sweeping anticorruption drive, which had curbed government spending and weighed on business confidence.
Those domestic strains were compounded by lingering global trade uncertainty as reciprocal tariffs imposed by US President Donald Trump disrupted trade flows and fueled sharp volatility in financial markets worldwide last year.
Data showed that equity capital flows, a measure of new foreign investments, had posted a net gain of $1.3 billion last year, marking a 31.4-percent growth.
Bulk of the FDIs in 2025 were in the form of intercompany borrowings between multinational firms and their local affiliates, which hit $5.3 billion. This, however, was 27-percent lower than a year ago.
Reinvestment of earnings inched up 2.5 percent to nearly $1.2 billion.
Looking ahead, Robert Dan Roces, group economist at SM Investments, said the FDIs could still recover this year despite the geopolitical flare-up in the Middle East.
“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,” Roces said.
The central bank expects foreign direct investment to reach a net inflow of $7.5 billion this year.
