When the economy was growing at its highest rate in 31 years, the central bank said all sectors generated savings because of strong revenues and better-managed costs.
The Bangko Sentral ng Pilipinas (BSP) released its 2007 Flow of Funds (FOF) report over the weekend, detailing how funds circulated through the system during the time of plenty two years ago.
The BSP said all sectors yielded savings in 2007, boosted by the favorable domestic economic performance, with real gross domestic product (GDP) growing by 7.2 percent — the highest recorded in 31 years.
The BSP said the non-financial corporate sector recorded the highest savings at P642 billion attributed to the combined effects of strong revenues and better-managed operating expenses, helped in turn by lower inflation rate and domestic interest rate environment in 2007.
The most profitable industries in 2007 were manufacturing, wholesale and retail, real estate, transport, communication and storage, and electricity, gas and water.
According to the BSP, the household sector remained the second largest saver generating P381-billion savings. This represented an increase by 6.5 percent from the 2006 level following the steady inflow of cash remittances from overseas Filipinos.
The BSP said that at the time, the national unemployment rate was also low at 7.3 percent compared with eight percent in 2006.
Meanwhile, the general government (GG) — which consisted of the national and local governments and social security agencies — realized a savings of P204 billion, recording the fastest annual growth at 76 percent.
The BSP attributed this to the substantial improvement in revenues on account of the robust domestic production, which increased the tax base, and improved administrative efficiency of collecting agencies.
Moreover, the BSP said fiscal savings was supported by lower growth in current operating expenditures, due in turn to the decline in interest payments.
On the other hand, the financial corporations sector remained a net saver, but its savings at P76 billion declined by 10.2 percent from the 2006 level as the non-bank financial corporations turned in lower profit in 2007.
The BSP said the decline was due to the lower net income of the banking sector, specifically from trading activities, and higher miscellaneous costs (such as advertising and marketing expenses) and other expenses incidental to bank mergers.
The BSP said the 2007 FOF also showed that growth in real investments was generally broad-based, with gross capital accumulation (or real investment) growing by 15.9 percent.
The BSP said the growth was evident across all institutions except for the financial sector.
The non-financial sector’s capital outlays — accounting for about half of the country’s capital accumulation in 2007 —grew by 8.1 percent on account of the private corporations’ expenditures on buildings and structures.
The household sector, which contributed more than a third of the total gross capital accumulation, also recorded an 18.5-percent increase in its annual capital accumulation primarily in dwelling units.