NET INFLOWS of foreign direct investments (FDI) slumped to a four-month low in January as geopolitical risks dampened investor sentiment, the Bangko Sentral ng Pilipinas (BSP) reported.
Preliminary data from the BSP showed FDI net inflows fell by 39.2% to $443 million in January from $729 million a yr ago.
Month on month, net inflows declined by 20.9% from $560 million in December.
January saw the bottom monthly FDI net inflow because the $316 million in September 2025.
“This means that rising geopolitical risks are weighing on investor sentiment,” the BSP said in an announcement.
BSP data showed foreign investments in debt instruments dropped by 38.4% to $320 million in January from $519 million a yr ago.
FDI in equity and investment fund shares slid by 41.1% to $123 million in January, from $209 million a yr ago.
Net equity aside from reinvestment of earnings declined by 19.9% to $70 million from $88 million a yr ago. Placements dipped by 8.8% to $93 million in January, from $102 million a yr ago, while withdrawals jumped by 57% to $22 million in January from $14 million a yr ago.
However, reinvestment of earnings plunged by 56.8% to $53 million in January from $122 million a yr ago.
In January, Japan was the principal source of FDIs, “with most inflows directed to the manufacturing industry.”
The BSP said equity placements were mainly from Japan, the US, and South Korea. These were invested mostly in manufacturing, real estate, and wholesale and retail trade sectors.
FDIs account for foreign investors’ investments in local businesses where they hold at the least a ten% equity capital, in addition to investments by a nonresident subsidiary or associate in its resident direct investor. It could possibly be in the shape of equity capital, reinvestment of earnings or borrowings.
The BSP’s FDI data cover actual investment flows, in comparison with the Philippine Statistics Authority’s foreign investments data which include investment commitments that will not be fully realized in a given period.
Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said that the weaker January FDI “reflects continued investor caution amid elevated geopolitical risks, tight global financial conditions, and uncertainty over the worldwide growth outlook, which appear to have weighed on intercompany funding flows.”
Mr. Asuncion said the present Middle East conflict may affect FDI inflows this yr.
“Going forward, the continuing Middle East tensions add to downside risks for FDI, as they may delay volatility in energy prices and further dampen investor sentiment, suggesting near‑term inflows may remain uneven,” he said.
The central bank sees FDI net inflows reaching $7.5 billion by yearend, lower than the $7.791 billion net inflows seen in 2025. — Justine Irish D. Tabile