2018 Philippine flow of funds show growth in saving and real investments : BSP 

February 8, 2020

In 2018, the Philippines generated a gross saving of P4,232.3 billion, 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.

This was contained in a statement by the Bangko Sentral ng Pilipinas ( BSP) on Friday.

The solid growth in the national saving came on the back of the country's sound macroeconomic fundamentals, it said.

The capital accumulation of the domestic economy rose 18.2 percent to P4,694.9 billion in 2018.

This was due mainly to the construction activities of private non-financial corporations and the robust infrastructure spending of the National Government (NG).

With 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 domestic sectors generated more saving during the period, except for the financial sector, resulting in higher national saving in 2018.

The non-financial corporations sector remained the largest saver in the economy with a saving of P2,372.4 billion 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/member contributions.

The household sector posted a firm growth in gross saving to aggregate at ^755.3 billion supported by higher compensation of employees, stronger inflow of Overseas Filipino (OF) workers' remittances, and greater social security benefits.

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

The broad-based sectoral increase in real investments boosted the capital accumulation of the domestic economy.

The capital accumulation of the non-financial corporations sector rose to P2,584.1 billion fueled by construction activities and capital outlays in durable equipment.

The general government's real investments reached P1,180.9 billion driven by the NG's higher public infrastructure spending. The capital accumulation of the household sector expanded to P878.1 billion due to residential construction activities.

Real investments by the financial corporations sector reached P51.7 billion buoyed by the stronger real investment activity and the slower disposal of real properties by the OFCs. 

The domestic economy's net borrowing from the rest of the world more than quadrupled in 2018. Among the sectors of the domestic economy, the general government was the largest net borrower at P391.5 billion, following the steep rise in its capital accumulation amid higher infrastructure spending.

The general government net acquisition of financial assets stood at P119.1 billion in 2018 due mainly to the sector's net placements in currency and deposits as well as equity securities and investment fund shares. Meanwhile, the sector's net incurrence of liabilities amounted to P510.6 billion, driven by the sector's net issuances of debt securities at ^495.3 billion. 

The net borrowing position of the non-financial corporations sector rose to ^210.4 billion following its strong real investment activities. Net incurrence of liabilities amounted to P 1,338.7 billion during the year, with the sector's net loan availments increasing by 38.4 percent to P934.9 billion to finance business operations/expansion. The sector's net acquisition of financial assets aggregated P1,128.2 billion. 

The household sector's net borrowing soared to P128.3 billion in 2018. The sector posted net incurrence of liabilities amounting to P693.2 billion during the year, with loans reaching P468.1 billion.

The net acquisition of financial assets of households stood at P564.9 billion in 2018. 

The financial corporations sector's net lending decreased marginally to P271.6 billion as the OFCs' net lending declined. The net acquisition of financial assets by the sector aggregated to P2,277.8 billion, with net loan provision amounting to P1,826.5 billion.

Meanwhile, the sector's net incurrence of liabilities decreased to P2,006.2 billion. Net placements in currency and deposits, which is the core funding base of the sector, amounted to P856.3 billion in 2018. 

The Flow of Funds (FOF), which is part of the System of National Accounts (SNA), 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 non-residents.

In the Philippines, the FOF is presented as an integrated matrix of capital and financial accounts of each of the institutional sectors (i.e., non-financial corporations, financial corporations, general government, households, and ROW) and the whole economy, linking saving, capital accumulation, and the associated financial flows. DMS