The nation’s overall gross savings in 2024 surged by 16.7% compared to the prior year, the Philippine Statistics Authority disclosed on Thursday.
At market prices, gross national savings, defined as the disparity between gross national disposable income and total household and government expenditures, amounted to P7.70 trillion, rising from P6.60 trillion in 2023.
This represents 26% of gross national income in 2024, an increase from the 24% noted the previous year.
The total economic output increased last year, with the gross domestic product (GDP) reflecting a revised growth rate of 5.7% and gross national income (GNI) at 7.7% in real terms, respectively.
At current prices, GDP and GNI also grew by 8.8% and 10.8% in 2024, respectively.
During this timeframe, household expenditures rose annually by 8.2% to P20.14 trillion. Government expenditures also experienced an uptick of 11% to P3.84 trillion.
In 2024, the Philippines’ gross national disposable income increased by 10.5% to P31.68 trillion from P28.66 trillion in the preceding year. This figure was calculated by deducting GNI from the net difference of current transfers to and from the global economy.
GNI per capita at market prices reached P264,804, surpassing P241,065 in 2023 and P210,228 in 2022.
Segmented by institutions, nonfinancial corporations contributed over half of the gross savings last year with P4.96 trillion, followed by financial corporations (25.7% share with P1.98 trillion), households including nonprofit institutions that serve households (NPISHs) (5.1% share with P393.31 billion), and general government savings (4.7% share with P364.98 billion).
Oikonomia Advisories and Research, Inc. Economist, Reinielle Matt M. Erece stated in an email that the increase in savings last year was mainly fueled by rising interest rates, prompting households and businesses to “curtail spending and retain their funds in banks to benefit from the interest rate.”
Prior to the Bangko Sentral ng Pilipinas (BSP) initiating its easing approach in August of last year, benchmark interest rates remained stable at 6.5%.
Since then, the BSP has cut key rates in three consecutive meetings last year but opted for a pause in February. The central bank reduced policy rates by 25 basis points each in April and June meetings, lowering the key rate to 5.25%.
“The inflation rate remains low and continues to trend downward. This creates an expectation among households to delay current consumption and save more, anticipating further price reductions in the future,” Tereso S. Tullao, Jr., director at De La Salle University-Angelo King Institute for Economic and Business Studies, communicated in a separate email.
Mr. Tullao added that improved economic performance and low unemployment rates might also contribute to increased savings as they align with income levels.
The nation’s unemployment rate fell to 3.8% in 2024, the lowest since the 7.8% recorded in 2005.
“Households may have slightly increased their consumption, but they could also be directing their remittances into financial instruments, thereby boosting their savings,” Mr. Tullao remarked.
He indicated that a stable economy, characterized by low inflation and unemployment rates, is crucial for sustained national savings.
Mr. Erece noted that the trend of increased spending could persist if price levels are controlled and further investments are made to enhance income growth.
For this year, Mr. Erece anticipated that the growth in savings may not reach the levels achieved in 2024.
“Rate reductions may encourage a higher volume of loans while decreasing the funds kept in financial institutions as savings,” he mentioned.
The Consolidated Accounts provide a synopsis of transactions and relationships among the various economic flows, while the Income and Outlay Accounts are compiled for the four institutional sectors: financial corporations, nonfinancial corporations, general government, and households including nonprofit institutions serving households. — Matthew Miguel L. Castillo