Savings in RP down 3% to P1.3 trillion in 2008

MANILA, Philippines – Total savings in the Philippines retreated by more than three percent during the height of the global financial and economic downturn as well as soaring commodity prices in 2008.

The Bangko Sentral ng Pilipinas (BSP) stated in the 2008 Flow of Funds (FOF) Report that the country’s total savings amounted to P1.306 trillion in 2008 or P42 billion lower than the P1.348 trillion registered in 2007.

“All sectors recorded savings in 2008, albeit at a level lower than the previous year’s level as soaring commodity prices as well as the global financial and economic downturn dented the economy’s performance,” the BSP said.

In 2008, the growth of the country’s domestic output as measured by the gross domestic product (GDP) skidded to a seven-year low of 3.8 percent from 7.1 percent in 2007 primarily due to the worldwide economic meltdown.

The central bank reported that the savings of the household sector jumped by 34 percent to P573.23 billion in 2008 from P426.72 billion in 2007 enabling it to dislodge non-financial corporation as the prime saver in the economy.

According to the BSP, about 34.3 percent of the savings of the household sector was largely driven by remittances from overseas Filipino workers (OFWs) that reached a record $16.4 billion in 2008.

On the other hand, savings of the non-financial corporation sector amounted to P440.4 billion in 2008 or P201.57 billion lower than the 2007 level of P641.97 billion due to plunging earnings of manufacturers.

“This level was, however, 31.4 percent lower than the previous year’s level due to the substantial drop in profits of the manufacturing sector as prices of raw materials, salaries and wages, and overhead costs increased,” the BSP explained.

Furthermore, the BSP reported that the general government sector consisting of the national and local governments and social security agencies posted a 17 percent increase in savings to P239.25 billion from P204.42 billion due to the higher premium receipts of the public pension funds.

Amid the worldwide financial crisis, the country’s financial sector managed to stay afloat despite plunging profits.

Data revealed that the savings of the financial sector plunged by 28.8 percent to P54.04 in 2008 from P75.85 billion in 2007.

“Savings was 28.8 percent lower than the 2007 level, due mainly to the decline in profits of the non-bank financial corporations as receipts of dividends, commission, and service fees dropped,” the BSP added.

The FOF presents a summary of financial transactions among the different institutions of the economy, and between these institutions and the rest of the world.

It identifies which institutions are net borrowers and net lenders in the series of financial transactions. Institutions are categorized into financial corporations; non-financial corporations; the general government; and the household sector. –Lawrence Agcaoili (The Philippine Star)