NET foreign direct investments (FDI) dropped in February from a year earlier amid caution due to the effects of the Middle East war, data from the Bangko Sentral ng Pilipinas (BSP) showed on Monday.
Inflows for the month totaled $590 million, down 30.9 percent from the year-earlier $855 million. It was, however, slightly higher than the $443 million posted a month earlier.
Year to date, net FDI inflows dropped 34.8 percent to $1.03 billion from $1.58 billion. Cumulative inflows have fallen since the start of 2025, attributed to heightened uncertainties.
Reyes Tacandong & Co. senior adviser Jonathan Ravelas said the decline in FDI this year reflects heightened global caution rather than weakening investor confidence in the Philippines.
“Higher global interest rates, geopolitical tensions in the Middle East, and strong base effects from last year have made investors more selective and slowed deal timing,” Ravelas said.
He said that faster inflation and slower economic growth create short-term uncertainty, prompting investors to postpone rather than abandon long-term investments.
“The month on month rebound tells us interest is still there, just uneven,” Ravelas said.
“Bottom line: this is a pause, not a pullout — if stability improves and reforms stay on track, FDI should recover gradually over the coming quarters,” he added.
The BSP data showed that nonresidents’ net investments in debt instruments dropped by 39.1 percent to $414 million in February from $680 million a year earlier. It rose, however, from $320 million a month ago.
Reinvestment of earnings rose to $75 million from $67 million a year ago and $53 million in January, and equity capital placements also rose to $101 million from $70 million a month earlier but declined from $108 million a year earlier.
To date, equity capital placements plunged by 12.5 percent to $171 million from $196 million in January–February 2025 while reinvestments of earnings also dropped by 32.2 percent to $128 million from $189 million. Net investments in debt instruments slumped by 38.8 percent to $734 million from $1.2 billion.
The January-February placements originated mostly from Japan, the United States and Singapore, the BSP said, with the top recipient sectors being manufacturing, financial and insurance, and real estate industries.
The central bank still expects net FDI to hit $7.5 billion this year and in 2027.
The BSP’s FDI figures differ from those of other government agencies in that these cover actual investments. The Philippine Statistics Authority, in contrast, publishes approved foreign investments — commitments that may not materialize.
