HOUSEHOLD DEBT declined in 2021, reflecting reluctance to take on additional debt during the pandemic, the Bangko Sentral ng Pilipinas (BSP) reported.
The BSP’s 2021 Consumer Finance Survey indicated that 29.3% of households carried debt during the period, much lower than the 40.4% in the 2018 survey.
“The pandemic prompted a significant reorientation of Filipino households’ approach to debt and savings. Faced with economic uncertainty, households increased their precautionary savings to protect against the risks of job losses and falling incomes.”
Bills accounted for 16.4% of household debt, followed by outstanding loans (15.2%) and credit card debt (0.7%).
“Government-imposed restrictions on movement and business operations severely limited traditional spending opportunities such as travel, dining, and entertainment,” the BSP said.
“However, these restrictions inadvertently raised savings, which offered households some respite during the crisis. Furthermore, households benefited from government financial assistance programs.”
The survey also showed the percentage of households receiving wage income jumped to 91.5% from 73.7% in 2018.
“Government employment initiatives implemented to counteract pandemic-related job losses largely drove this increase.”
“About 9.8% of households received income from businesses, primarily sole proprietorships in retail or food service, while 55.65% relied on other sources, mainly government pandemic assistance or ayuda.”
These subsidies include cash or food packs, which helped provide “essential financial support to many households facing economic hardships due to lockdowns and job losses.”
Meanwhile, home appliances and equipment were the top owned household assets (96.6%), followed by residential property (69.9%), and vehicles (35.3%).
Motorcycles were the most commonly owned vehicle at 61.7%.
“A notable shift occurred in homeownership trends, with more families choosing rental accommodations (11.3%) compared to the previous survey round (10.2%).”
“The composition of financial assets revealed interesting patterns of financial behavior,” it added.
The highest ownership rates were seen in deposit accounts (35.3%), followed by traditional cash savings kept at home (28.7%), and e-money accounts (24.3%).
“The post-pandemic recovery period witnessed substantial growth across financial asset categories, particularly in formal banking relationships and digital financial products.”
“Financial institutions played a pivotal role in this transition by accelerating the development of user-friendly digital services. These services addressed the evolving needs of consumers who increasingly required remote access to financial resources during lockdown periods.” — Luisa Maria Jacinta C. Jocson