BSP blames Filipinos’ spending over saving for weak peso

The central bank says the Philippines needs to save more, but household budgets leave many Filipinos with little money to set aside.

The Bangko Sentral ng Pilipinas recently pointed to Filipinos’ tendency to spend rather than save as one factor contributing to the country’s persistent peso weakness.

The central bank said the country has a “consumption culture” and argued that the country needs to save more, linking domestic savings to the persistent gap between investment and savings.

The remarks come as household spending continues to account for a large share of economic activity. However, Philippine Statistics Authority (PSA) data show that household final consumption expenditure grew by only 2.8% year-on-year in the second quarter of 2026, down from 5.2% a year earlier.

At the household level, however, saving is closely tied to the income remaining after basic expenses, with the latest PSA Family Income and Expenditure Survey (FIES) showing substantial differences in both income and spending among Filipino families.

The latest 2025 FIES data show that average annual family expenditure reached hundreds of thousands of pesos, covering necessities such as food, housing, transportation, utilities, healthcare, and education.

That leaves a practical constraint for households with limited earnings because money spent on necessities cannot simply be redirected to savings. Workers also have to account for taxes, government contributions, debt payments, and other financial obligations.

Higher national savings can help narrow the savings-investment gap, but Filipinos do not automatically have the capacity to save simply because policymakers want household savings to rise.

The peso’s performance is influenced by various factors, including the country’s external trade position, capital flows, global conditions, and demand for US dollars, making household consumption only one part of a much larger economic picture.

When most of a paycheck is already committed to basic needs, having little left to save can reflect limited financial capacity, rather than simply a preference for spending.

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