MANILA, Philippines — Foreign direct investments (FDI) in the Philippines fell to a pandemic-era low in 2025, finishing a year marred by global trade tensions and domestic governance concerns that unsettled investors.
The Bangko Sentral ng Pilipinas (BSP) reported that FDI net inflows reached $7.8 billion last year. While this figure managed to exceed the central bank’s original forecast of $7 billion, it represents a 17.1-percent decline from 2024. This marks the weakest performance for FDI since 2020, when the COVID-19 pandemic dragged inflows down to $6.8 billion.
The latest data reflected a period of heightened investor caution. Analysts pointed to a combination of domestic and international “headwinds,” including the Marcos administration’s sweeping anti-corruption drive—which temporarily curbed government spending—and climate-related disruptions that slowed the country’s GDP growth to 4.4 percent, missing official targets.
Externally, the Philippine economy felt the ripple effects of global trade uncertainty. Reciprocal tariffs imposed by U.S. President Donald Trump disrupted international trade flows and triggered volatility across global financial markets, further dampening the appetite for long-term overseas commitments.
A breakdown of the BSP data showed that equity capital flows, a primary measure of new investments, actually grew by 31.4 percent to $1.3 billion. However, this was offset by a significant 27-percent drop in intercompany borrowings between multinational firms and their local affiliates, which totaled $5.3 billion.
Despite the slump, some experts remain cautiously optimistic for the coming year. Robert Dan Roces, group economist at SM Investments, suggested that while geopolitical tensions in the Middle East present new risks through oil price shocks, a recovery is possible in 2026. He noted that manufacturing, renewable energy, and logistics remain attractive sectors as global supply chains continue to diversify.
The BSP currently projects that FDI net inflows will rebound slightly to $7.5 billion in 2026 as global financial conditions begin to ease.
