Domestic institutions absorbed about 90.4 percent of the total supply of production and imports for economic activities, final consumption and capital or savings formation in 2017, according to the central bank’s newly-constructed matrix.
The Bangko Sentral Pilipinas (BSP) on Thursday, Nov. 4, released its Philippine Financial Social Accounting Matrix (PFSAM 2017) for an overview of the economy’s real and financial transactions in 2017. The matrix provides a comprehensive database on the economy and can be used to assess the performance of the economy.
Based on the PFSAM, under the production and income accounts, household final consumption expenditure was the highest contributor to gross domestic product (GDP) at 75.1 percent, and government consumption was the least at 8.7 percent.
Using the income approach, the BSP said compensation of employees accounted for 35.2 percent of GDP while mixed income contributed about 30.6 percent.
The report said that in 2017, the economy has used up or consumed nearly all outputs of the following: electricity, gas and water; construction; public administration and defense; financial intermediation services; and agriculture, hunting, forestry and fishing.
The BSP said the household sector contributed the biggest share of the gross national income (GNI) at 71 percent during the period. It also had the largest net current transfers received, and the highest level of disposable income among the domestic institutions.
The BSP said almost 92 percent of households’ income came from compensation income (44.1 percent); mixed income (35.6 percent); and transfers (12.2 percent). A large share of household income was spent on consumption at 87.5 percent.
In the meantime, the non-financial corporations (NFCs) contributed 18.3 percent to GNI. In terms of savings, NFCs have the biggest share followed by the household sector. NFCs in 2017 financed their investment demand with their savings or 66.3 percent and liabilities (33.7 percent), as loans and equities.
“The structure of the economy is basically similar both in the 2010 and 2017 PFSAM,” noted the BSP.
“However, the domestic economy was in a net borrowing position in 2017, while in 2010, it was net lender with the rest of the world. This was reflective of the country’s the current account position of the country, which turned into deficit in 2017 from a surplus in 2010,” it added.
The BSP said that overall, the domestic economy was in a net borrowing position with the rest of the world (ROW) in 2017. All sectors were net borrowers, except for the financial corporations sector, it added.
The main objective of PFSAM is to “connect the multi-industrial relationships in production to the multi-sectoral distribution of income, consumption, investment in produced and non-produced assets and financial instruments and the interlinkages between the domestic institutions and, in turn, these institutions with the ROW,” said the BSP.
In 2017, global conditions were gripped by Brexit and the trade war between US and China, as well as the newly-installed Trump administration’s immigration issues. There were also geopolitical concerns in the Korean peninsula, China and India.
In the Philippines, the first phase of a series of tax reform packages were done in 2017 and it took effect in 2018. The local GDP grew by 6.7 percent in 2017, within the government target of 6.5 percent to 7.5 percent. At the time, inflation averaged at 2.9 percent, also within the two-four percent target of the BSP.