Overall, the Philippines generated a gross saving of P4,993.8 billion, 11.2 percent higher than the P4,489.5 billion recorded in 2018. This developed amid solid macroeconomic fundamentals—low and stable inflation, sound financial system, continued influx of Overseas Filipinos’ (OF) remittances, and improved labor market conditions during the year. Similarly, the country’s capital accumulation increased by 3.9 percent to P5,152.9 billion from P4,959.6 billion in 2018. Given that the growth in the country’s gross saving outpaced the growth in capital accumulation, the domestic economy’s net borrowing from the rest of world (ROW) declined by 67.2 percent to P152.7 billion from P466.1 billion in 2018. This lower net borrowing from the ROW reflected the improvement in the country’s current account deficit, which considerably narrowed to $3 billion in 2019 from $8.9 billion in 2018. The key developments in 2019 are summarized below.
All domestic sectors generated higher saving during the period, led by the non-financial corporations (NFCs), which remained to be the top saver in the economy. The NFCs posted a gross saving of P2,827.2 billion from P2,616.8 billion in 2018, amid the continued profitability of its core industries. The households (HHs) sector was the second largest saver in the domestic economy with a gross saving of P977.8 billion from P838.9 billion in 2018, supported by favorable labor market conditions, all-time high OF personal remittances, higher social security benefits, and better saving behavior among HHs. The general government (GG) sector’s saving grew to P794.6 billion from P761.3 billion in 2018, owing to higher revenues of local government units (LGUs) and member contributions to social security agencies (SSAs). The financial corporations’ (FCs) saving reached P394.2 billion from P272.6 billion the previous year, with the other financial corporations (OFCs) posting the biggest increase in terms of levels, mainly due to higher interest and investment income.
The increase in real investments across all domestic sectors buoyed the capital accumulation of the domestic economy. The NFCs’ real investments increased to P2,887.2 billion from P2,822.6 billion in 2018, as public NFCs reversed to a buildup of P60.7 billion from a disposal of P32.1 billion a year ago. The GG’s capital accumulation totaled P1,203.6 billion from P1,158.9 billion in 2018, on the back of the national government’s (NG) capital spending on infrastructure and other capital outlays for big-ticket infrastructure projects. The HHs’ real investments posted a modest growth of only 0.4 percent to P947.6 billion from P943.9 billion in the previous year, following the sector’s tapered residential construction activities. Meanwhile, the FCs’ real investments more than tripled to P114.4 billion from P34.1 billion in 2018, bolstered by the other depository corporations’ (ODCs) higher acquisition of property and equipment due in part to the continued expansion in the banking system’s physical network.
The domestic economy’s net borrowing from the ROW declined in 2019. The FCs’ net lending increased to P279.8 billion from P238.5 billion in 2018, led by the OFCs at P135.8 billion, followed by the ODCs at P128 billion. Further, the Bangko Sentral ng Pilipinas (BSP) regained its net lender position at P15.9 billion after three (3) years of being a net borrower. The sector’s acquisition of financial assets during the period rose to P2,697.6 billion from P2,460.9 billion in the previous year. This was driven by the reversal in the sector’s net placement in debt securities amounting to P1,261.6 billion, from a net drawdown of P717.4 billion in 2018, mirroring the upturn in the BSP’s net purchases of foreign debt securities during the year from a net disposal in 2018. Meanwhile, the sector’s net incurrence of liabilities reached P2,417.8 billion from P2,222.4 billion a year ago. This was on the back of the NFCs’ and HHs’ substantially higher net deposit placements with the ODCs during the period. Likewise, the BSP’s liabilities increased as the ODCs’ net withdrawal from BSP’s deposit facilities in 2018 reversed to net placements in 2019.
The HHs regained its net lender position at P36.2 billion after four (4) years of being a net borrower. This was a turnaround from its net borrowing of P99.6 billion in 2018. The notable increase in the HHs’ saving, combined with the slowdown in the growth of its capital formation led to the reversal in the sector’s net borrowing position. The sector’s acquisition of financial assets rose to P898.6 billion from P711.4 billion in 2018. This stemmed from the marked increase in its deposit placements with the ODCs. Meanwhile, the sector’s net incurrence of liabilities grew to P862.5 billion from P811 billion in the preceding year as the HHs’ net loan availments expanded.
The NFCs and GG remained net borrowers. The NFCs recorded a smaller net borrowing of P64.4 billion compared to P211.6 billion in 2018. The sector’s net acquisition of financial assets reached P866.6 billion from P761.3 billion in the previous year as the sector more than doubled its deposits with the ODCs in 2019. Meanwhile, the NFC’s net incurrence of liabilities declined to P931 billion from P972.8 billion in 2018 as a result of lower net loan availments.
The GG remained the largest net borrower at P404.3 billion from P393.4 billion in 2018, with the NG posting a larger net borrowing than the combined net lending of the LGUs and SSAs. The sector’s net acquisition of financial assets of P596.6 billion in 2018 reversed to a net disposal of financial assets of P90.1 billion in 2019, following its withdrawal of some of its deposits with the BSP and ODCs as part of the GG’s cash operations. The sector’s net incurrence of liabilities declined to P314.2 billion from P990 billion a year ago, following the GG’s net repayment of its other accounts payable amounting to P362.3 billion.
Source: Bangko Sentral ng Pilipinas (BSP)
