By Luz Wendy T. Noble, Reporter

DEPOSIT GROWTH is likely to slow in the remaining months of 2020 as Filipinos are likely to tap their savings for the upcoming holidays, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi G. Fonacier said.

“Our outlook on savings is that it will continue to grow. But, maybe, not at the rate it has grown in the past,” Ms. Fonacier said in a text message.

Total deposits rose 3% to P14.3 trillion as of end-July, BSP Governor Benjamin E. Diokno earlier said. This, as Filipinos chose to boost their savings amid heightened uncertainty due to the pandemic.

The rise in bank deposits can be attributed to the liquidity boost from the BSP as well as the recession, according to ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa.

The BSP’s policy measures have so far infused P1.9 trillion in liquidity to the financial system, equivalent to about 9.6% of the country’s gross domestic product, Mr. Diokno has said.

“With the pandemic forcing the economy into a deep recession, households have entered conservation mode and are putting off discretionary spending, luxury and leisure spending and select big-ticket investments given the uncertainty,” Mr. Mapa said in an e-mail.

The country fell into a recession as GDP shrank by a record 16.5% in the second quarter. Household spending, which accounts for about 70% of the GDP, also contracted by a record 15.5%.

As quarantine restrictions ease, Ms. Fonacier said spending is likely to pick up as the holiday season nears.

“It’s in the Filipino culture to always share during Christmas, hence, the spending pattern goes up at this time.  OFWs (overseas Filipino workers) would normally send more money for Christmas,” she said.

“Also, employers would normally have something for their employees even in difficult times because it has been the tradition to always share during Christmas,” she added.

Mr. Mapa said the spending across the board tend to jump right after All Souls’ Day (Nov. 2) as people prepare for the holiday season, but this year could be a different story.

For UnionBank of the Philippines Chief Economist Ruben Carlo O. Asuncion, effective virus containment is still the key to economic recovery.

“COVID-19 (coronavirus disease 2019) still persists and advance countries’ current experiences with virus resurgence post a huge threat to emerging economies especially to those who do not have a clear grip on the containment of the disease,” Mr. Asuncion said in a text message.

The Health department reported 1,607 new coronavirus infections, bringing the total to 371,630. This is the second-highest number of infections in Southeast Asia.

As unemployment remains high, many consumers may be restrained about holiday spending this year.

Unemployment rate in July stood at 10%, easing from the record 17.7% in April but still nearly double the 5.4% seen a year ago. The July figures represent 4.571 million jobless Filipinos, lower than 7.254 million in April, but higher than 2.437 million in the same month of 2019.

“This unfortunately will translate to a lower likelihood for a quick recovery as the economy enters a lower growth path with consumer and business confidence reeling from the pandemic,” Mr. Mapa said.

The government expects the economy to shrink by 4.5 to 6.6% this year, before growing by 6.5% to 7.5% in 2021.