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Foreign investments in Philippines tumble to decade low in 2025, excluding pandemic
Foreign investments in Philippines tumble to decade low in 2025, excluding pandemic
By Derco Rosal
At A Glance
- Net inflows of foreign direct investment (FDI) into the Philippines plunged to their lowest level in a decade—excluding the pandemic slump—as investors stepped on the brakes in injecting funds into the country.
Net inflows of foreign direct investment (FDI) into the Philippines plunged to their lowest level in a decade—excluding the pandemic slump—as investors stepped on the brakes on injecting funds into the country.
The latest data from the Bangko Sentral ng Pilipinas (BSP) released on Tuesday night, March 10, showed net inflows of FDI stood at $7.79 billion for the full year of 2025, dropping 17.1 percent from the $9.4 billion recorded in 2024.
It bears noting that the 2025 performance marks a significant downturn, as full-year FDI was the lowest since the 2020 pandemic level of $6.82 billion.
Excluding the pandemic period, 2025 net FDI represents the lowest level in a decade since the $5.64 billion recorded in 2015. This contraction was a consistent trend throughout 2025, with cumulative annual growth remaining negative every month since January.
On a positive note, the final figure exceeded the country’s $7-billion full-year target.
According to the BSP, the overall decline in investments was largely driven by net debt instruments, or intercompany borrowings, which shrank by 27 percent to $5.27 billion from $7.22 billion in 2024.
Meanwhile, net equity capital, other than reinvestment of earnings, grew by 31.4 percent to $1.32 billion from $1.01 billion the previous year. Reinvestment of earnings also saw a modest expansion of 2.5 percent, reaching $1.2 billion.
For the full year, equity capital placements were primarily sourced from Japan, the United States (US), Singapore, and South Korea.
Investments were largely channeled into financial and insurance activities, manufacturing, and wholesale and retail trade.
In December 2025 alone, net inflows were recorded at $560 million, marking the lowest in three months since September 2025 at $316 million.
Looking ahead, Roces believes the ongoing military conflict in the Middle East could add a layer of uncertainty, triggering market volatility. Still, he sees a gradual rebound in 2026 on the back of improving global financial conditions.
“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 (RE), and logistics, as global financial conditions ease and supply-chain diversification continues,” Roces said.
FDI refers to cross-border investments in which a nonresident investor owns at least 10 percent of the equity in a local enterprise and may take the form of equity capital, reinvested earnings, or intercompany borrowings.
These statistics track actual investment inflows—including equity capital, reinvested earnings, and intercompany borrowings—and are presented in net terms, or placements less withdrawals.