PH economy savings down in 2020 due to Covid
THE Philippine economy’s total savings in 2020 fell by 26.1 percent to P3.7 trillion from P5 trillion in 2019 due to the lockdown measures implemented by the government to control the spread of Covid-19, Bangko Sentral ng Pilipinas (BSP) said Friday.
“These measures dampened domestic consumption and production activities of major industries,” it said.
As a result, real investments or capital accumulation fell sharply by 39.5 percent year on year.
Overall, the domestic economy became a net lender vis-à-vis the rest of the world at P575.9 billion, a reversal from the previous year’s net borrower position of P152.7 billion.
“This reflected the movement in the country’s current account — which reversed from a deficit in 2019 to a surplus in 2020. The reversal was caused mainly by the contraction in trade in goods deficit, resulting from the sharp decline in the importation of goods,” the BSP said.
The central bank said the effect of the pandemic was evident in the 20.5-percent drop in the nonfinancial corporations’ gross saving to P2.2 trillion from P2.8 trillion in the previous year.
Core industries, such as manufacturing, real estate and utilities supply, managed to post net income during the year, albeit about a third lower from 2019.
The households sector recorded a lower gross saving of P983.2 billion from P1.1 trillion in 2019. The decline in the sector’s saving was due to the adverse effects of the pandemic on domestic and global labor market conditions as reflected through higher unemployment rates and lower inflows of remittances from overseas Filipinos.
The financial corporations generated an aggregate saving of P564.4 billion, 52.5 percent higher than the P370.1 billion recorded in the previous year.
Among the financial corporations’ subsectors, other depository corporations and other financial corporations posted higher saving. In contrast, the BSP recorded a dissaving during the period.
The general government became a dissaver at P58.1 billion, a reversal from its P801.5-billion saving in 2019. This was driven mainly by the central government’s dissaving, which arose from the surge in government spending on pandemic-related expenditures along with subdued tax collections.
The nonfinancial corporations’ real investments contracted by 43.3 percent to P1.6 trillion in 2020 from the P2.8 trillion recorded in 2019 due mainly to the decrease in private nonfinancial corporations’ investing activities.
Meanwhile, the public nonfinancial corporations’ real investments more than tripled due to the development and construction of projects of the Manila Water Sewerage System and Bases Conversion Development Authority.
The general government’s capital accumulation reached P1.1 trillion, 12.3 percent lower than the P1.2 trillion recorded in 2019. All subsectors recorded lower real investments during the period, with the central government contributing significantly to the decline in the sector’s capital accumulation.
The lockdown measures also significantly restrained households’ investing activities as the sector’s real investments decreased markedly to P343.6 billion from the P965.4 billion in 2019.
“The significant decline was driven mainly by the households’ lower investments in real estate, which also caused residential real estate loans to decelerate,” it said.
The financial corporations’ real investments fell to P87.3 billion, 24.2 percent lower than the P115.1 billion reported a year ago. The other depository corporations held the largest share of the sector’s real investments in 2020 followed by the BSP and the other financial corporations.