‘Sound economy’ boosted PH gross savings, says BSP

The Philippines generated gross savings of P4.23 trillion in 2018—9.5 percent higher than the previous year—despite trade tensions among the world’s major economies, surging crude oil prices, rising consumer prices in the country, and a weakening peso.

Thus said the Bangko Sentral ng Pilipinas in its recently completed flow of funds report for 2018 which said that this “solid growth” in the national savings came on the back of the country’s sound macroeconomic fundamentals.

The flow of funds is a summary of financial transactions among the residents or domestic sectors of an economy, and between these sectors and the rest of the world or nonresidents. These are presented as a matrix of capital and financial accounts of each sector (nonfinancial corporations, financial corporations, general government, households, and the rest of the world) and the whole economy, linking savings, capital accumulation and financial flows.

The report showed the capital accumulation of the domestic economy soared 18.2 percent to P4.69 trillion in 2018.

“This was due mainly to the construction activities of private nonfinancial corporations and the robust infrastructure spending of the national government,” the central bank said in a statement released over the weekend.

With the growth in capital accumulation outpacing the increase in saving, the domestic economy’s net borrowing surged to P458.6 billion in 2018, which was more than four times larger than the P104.1 billion recorded in 2017.

“This trend mirrored the country’s widening current account deficit, which reached $8.7 billion from $2.1 billion in 2017, due mainly to higher imports of raw materials and intermediate goods used in production processes and capital formation,” the central bank said.

The nonfinancial corporations sector remained the largest saver in the economy with a saving of P2.37 trillion amid profitable operations of core industries.

The general government, the biggest contributor to the growth of the country’s gross saving, intensified its saving to P781.3 billion on the back of higher tax revenue collections and premium or member contributions.

The household sector posted a firm growth in gross saving to aggregate at P755.3 billion supported by higher compensation of employees, stronger inflow of overseas Filipino workers’ remittances, and greater social security benefits.

The financial corporations sector maintained its saving position, albeit slightly lower at P323.4 billion, due to the lower investment income of other financial corporations.

During this period, the capital accumulation of the nonfinancial corporations sector rose to P2.58 trillion fueled by construction activities and capital outlays in durable equipment.

The general government’s real investments reached P1.18 trillion driven by the national government’s higher public infrastructure spending.

The capital accumulation of the household sector expanded to P878.1 billion due to residential construction activities, while real investments by financial corporations sector reached P51.7 billion buoyed by the stronger real investment activity and the slower disposal of real properties by other financial corporations. INQ