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For rainy days

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The Philippine Statistics Authority’s latest consolidated accounts and income and outlay accounts report showed the country’s 2021 gross savings dropped 12.4 percent to P3.88 trillion from P4.43 trillion in 2020.

As gross savings is the difference between gross national disposable income and the total goods and services consumed by the government and households, it is an indication that the prolonged COVID-19 pandemic has drained the financial resources of Filipino families and firms.

In 2019, or before the pandemic, the country’s gross savings amounted to P6.15 trillion.

The good news is that the PSA found the gross national disposable income last year to have risen 4.2 percent as the economy recovered from its pandemic-induced slump two years ago. Businesses also rebounded from the country’s worst postwar recession in 2020.

However, households badly hit by job losses as well as the government which spent more to fight COVID have yet to restore their saving ways. PSA data showed that the government in particular spent more than it earned, amounting to P490 billion in 2021. As for households and non-profit institutions, a bigger dissaving of P620 billion was recorded last year.

Interestingly, the “revenge” spending during the first quarter, although it let to stronger-than-expected gross domestic product growth, also resulted in savings drying up further as the cost of living shot up, driven by higher prices of food and oil products.

Governments, businesses and households should ideally earn more than they spend in order to prepare for inevitable future needs as well as have something for emergencies. For the many that surviving the pandemic has meant dipping into savings or going into debt, any form of economic recovery should not only include the ability to earn a living, but also the restoration of the ability to save for a rainy day.*

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March 2024
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