MANILA, Philippines — The number of Filipino adults with savings dropped by 25 percent from 38.6 million in 2019 to 28.9 million in 2021 due to the impact of the COVID-19 pandemic, according to the Bangko Sentral ng Pilipinas (BSP).
Based on the 2021 Financial Inclusion Survey, the incidence of savings declined to 37 percent of the 77.2 million Filipino adults from 53 percent in 2019, partly due to the global health crisis that may have reduced household income or increased medical expenses.
This was consistent with the lower percentage of account holders at 56 percent who utilized their accounts to save in 2021, from 76 percent in 2019.
For the savers in 2021, majority or 81 percent cited that they allocated savings for emergencies while other considerations include the achievement of financial or life goals at 43 percent, cover daily expenses at 41 percent and to prepare for retirement at 12 percent.
For 2021, the BSP said the number of Filipino adults without savings increased to 63 percent from 47 percent in 2019. A total of 48.3 million Filipino adults had no savings as of last year.
The number of Filipino savers dropped despite the increase in the number of adults with formal accounts to 42.9 million or 56 percent in 2021 from 20.9 million or 29 percent in 2019. This resulted in a decline in the number of unbanked Filipino adults to 34.3 million or 44 percent from 51.2 million or 71 percent.
According to the survey, saving was more prevalent among those belonging to socio-economic class ABC, college graduates, Mindanao residents, accountholders, business owners and workers.
The BSP added that the percentage of savers significantly declined, particularly among adults in the National Capital Region, South Luzon, the Visayas, socio-economic class E, those who are working and residing in urban areas.
“The lower incidence of savings in 2021 was recorded across geographical areas except in Mindanao, which registered an increase and surpassed all areas,” it said.
Data showed that the number of savers in Metro Manila decreased to 28 percent in 2021 from 65 percent in 2019, registering the second lowest savings incidence after South Luzon.
Likewise, 83 percent of respondents in class ABC saved in 2021 from 79 percent in 2019. This was outweighed by the decline of low-income classes D savers to 36 percent from 55 percent and E savers to 27 percent from 48 percent.
Unemployment rising
Meanwhile, the labor market will remain challenging next year with more Filipinos likely to be unemployed amid the lingering impacts of the pandemic and the continued rise in commodity prices.
Based on the Budget of Expenditures and Sources of Financing following the submission of the record P5.268-trillion proposed national budget for 2023, unemployment rate in the country is seen jumping to 5.7 to 6.8 percent in 2023.
This is higher than the expectation of a 5.1 to 6.5 percent unemployment rate this year.
The rate, however, will ease to five to 5.3 percent by 2024 but will pick up again to 5.5 to 5.8 percent a year after.
Leonardo Lanzona, labor economist and professor at the Ateneo De Manila University, said the effects of the pandemic are much deeper than expected.
“The new projections on unemployment are also based on the assumption that inflation will continue to hurt the economy,” Lanzona told The STAR.
Inflation remains stubbornly high at 6.4 percent in July. The central bank raised its forecast for 2022 to 5.4 percent before easing to four percent next year. – Louise Maureen Simeon