MANILA, Philippines — The country’s total savings last year dropped to P3.88 trillion as consumers tapped on their kept resources and moved toward revenge spending with the further reopening of the economy from the pandemic.
Latest data from the Philippine Statistics Authority (PSA) showed that gross savings in 2021 declined 12.4 percent to P3.88 trillion from P4.43 trillion during the height of COVID in 2020.
Non-financial corporations took the chunk of the savings at P3.54 trillion, followed by financial corporations at P1.46 trillion.
On the other hand, households and the general government recorded a dissaving of P620 billion and P490 billion, respectively.
ING Bank senior economist Nicholas Mapa explained that Filipinos appeared to have dipped into their savings to partake in some revenge spending as the economy reopened.
“They did things that they have not been able to do during lockdowns. As a result, we have had an extremely strong GDP (gross domestic product) performance – with malls packed, restaurants full, and traffic back to pre-COVID levels,” Mapa said in an exchange.
“We will have to see how much longer consumers can sustain this as savings are drawn down while prices soar,” he said.
Rizal Commercial Banking Corp. chief economist Michael Ricafort, for his part, concurred and emphasized that economic reopening allowed more people, businesses, and other institutions to spend more, including some revenge spending.
“Economic reopening increased the confidence of consumers and businesses to spend and invest more, thereby utilizing their savings to grab more business opportunities that offer higher returns and make their money work for them better with more income,” Ricafort said in a separate message.
Further, Ricafort noted that the decreased savings in the country last year can also be attributed to the pockets of lockdowns imposed by the government.
The government reimposed the enhanced community quarantine in April and another one in August due to the Delta variant.
These moves prompted individuals and businesses to tap their savings to tide them over during the lockdowns.
“This is especially true for the hard hit and vulnerable sectors that required financial assistance from the government in view of depleted savings or even debts incurred, especially by the poor,” Ricafort said.
Among the factors of production, PSA said gross operating surplus remained to record the highest contribution at 55.7 percent, followed by compensation of employees at 36.7 percent, and taxes less subsidies on production and imports at 7.6 percent.
Last year, the country’s gross national disposable income was valued at P21.51 trillion, up 4.2 percent.