Foreign direct investment (FDI) inflows rebounded to a three-month high in February as foreign capital continued to flow into the country despite lingering global uncertainties.
Data from the Bangko Sentral ng Pilipinas (BSP) showed FDI net inflows rose by 33.2 percent to $590 million in February from $443 million in January. It was the highest level in three months or since the $894 million recorded in November last year.
However, the latest figure was still down by 31 percent from the $855 million inflows posted in February 2025 as rising inflation, high borrowing costs and geopolitical tensions continued to weigh on investor sentiment.
FDI refers to investments by foreign investors that own at least 10 percent of a local enterprise. The BSP tracks actual inflows, unlike approved foreign investments reported by investment promotion agencies, which cover commitments that may not be fully realized.
The month-on-month increase was driven mainly by higher net investments in debt instruments, which rose by 29.4 percent to $414 million in February from $320 million in January.
Debt instruments, which consist largely of borrowings between foreign investors and their Philippine subsidiaries, accounted for about 70 percent of total FDI inflows during the month.
Equity capital other than reinvestment of earnings also increased by 44.3 percent to $101 million from $70 million a month earlier, as equity placements rose by 19.4 percent to $111 million while withdrawals fell by 54.5 percent to $10 million.
Reinvestment of earnings climbed by 41.5 percent to $75 million in February from $53 million in January.
On a year-on-year basis, however, the decline in FDI was due mainly to lower net investments in debt instruments, which fell by 39.1 percent from $680 million in February 2025. Net equity capital also slipped by 6.4 percent from $108 million a year ago.
For the first two months, FDI inflows dropped by 34.8 percent to $1.03 billion from $1.58 billion in the same period last year.
The BSP said the United States was the leading source of FDI in February, while firms engaged in financial and insurance activities were the biggest recipients.
Equity capital placements came mainly from Japan, the US and Singapore. These were channeled largely into manufacturing, financial and insurance as well as real estate activities.
SM Investments Corp. group economist Robert Dan Roces said the year-on-year decline showed that global investors have become more cautious amid wars, high borrowing costs and uncertainty overseas.
However, Roces said the rebound from January suggests that capital has not left the Philippines, but has become ‘more selective and timing-sensitive.’
‘What matters actually is less the headline size of FDI and more whether the country continues attracting investments tied to long-term demand such as infrastructure, digital services, manufacturing and supply chain shifts,’ Roces said.
PIDS senior research fellow John Paolo Rivera said the February rebound shows that foreign capital continues to enter the country, but the weaker year-to-date level points to a still-challenging investment environment.
‘Investors tend to become more cautious when growth prospects soften and financing conditions remain tight,’ Rivera said.
Higher inflation and slower economic growth could temper FDI inflows in the coming months as these raise operating costs and reduce expectations of market expansion, he added.