In the concluding installment of a three-part column series for BusinessWorld, Alexander C. Escucha argues that Filipinos do not deserve the "mayabang" label — a Tagalog word meaning boastful — that is sometimes invoked to explain the country's persistent external imbalances. Households, he contends, save what their incomes allow, and low-income earners spend most of their earnings on necessities, in line with Engel's law. The Philippines saves as much as, or more than, comparable economies at its income level, and its savings rate has climbed for 15 years.

A key clarification frames the series: the gross national savings rate of 29% cited in the series comes from the Philippine Statistics Authority (PSA) and includes overseas Filipino worker (OFW) and foreign income, while the 19% ratio from the International Monetary Fund (IMF), cited by Ciel Habito in a separate column, excludes OFW remittances. According to the author, the 10-point difference does not alter the analysis or the conclusion.

The crux of the argument is that the continuing pressure on the peso exchange rate from current account deficits is driven not by how little the country saves, but by how little it sells to the world and how much it buys from it.

What Drives the Deficit

The most authoritative guide to what should be done, the column suggests, comes from the Bangko Sentral ng Pilipinas (BSP) itself. Last year, the central bank published Current Account Dynamics and the Philippine Economy: Developments and Prospects, edited by Mario B. Lamberte. Its second chapter, written by BSP economists Vic K. Delloro, Hazel C. Parcon-Santos, and Jose Adlai M. Tancangco, estimates what has driven the Philippine current account using quarterly data from 1993 to 2023.

The authors identify five key variables. Exports, foreign direct investment (FDI), and the government's fiscal balance improve the current account. Faster GDP growth and a stronger real effective exchange rate — the peso's value against the currencies of trading partners, adjusted for inflation — worsen it. FDI and exports carry the largest effects. Household thrift is not on the list — the only savings variable in the model is the government's own fiscal balance.

National savings do fall short of the country's investment needs, but that is true only in aggregate. National saving is the sum of private and public saving, and the two tell different stories. Consider 2025: the current account deficit was 3.3% of GDP, while the National Government's budget deficit was 5.63% of GDP. Because the current account equals the combined savings-investment gaps of the private and public sectors, the private side ran a surplus of roughly 2% of GDP.

That figure is approximate, since the Social Security System, the Government Service Insurance System, and local governments usually run surpluses that make the consolidated public deficit smaller than the National Government's. But the direction, Escucha argues, is unmistakable: households and firms save more than they invest, while the government is borrowing more than absorbs that surplus. The country's savings gap is in the public accounts, not in the household budget.

A Goods Problem

Since 1980, the Philippines has posted a deficit in services trade only twice, in the crisis years of 1982 and 1998. Remittances and outsourcing receipts have cushioned the external accounts for decades. The hole is in goods.

Growth in the Philippines is import-hungry. From 2020 to 2022, raw materials, intermediate goods, and capital goods made up 71.4% of imports. In the 2010s, imports grew 10.9% a year against 6.9% for exports. The export base is also narrow: machinery and electronics, mostly semiconductors, averaged 62.1% of exports from 1996 to 2022, giving the Philippines the least diversified export basket in the ASEAN-5, the grouping of Indonesia, Malaysia, the Philippines, Singapore, and Thailand.\nBy contrast, Thailand's goods trade has been in surplus since 1997, and Vietnam swung to a current account surplus by the end of the 2010s on the strength of export-led growth and foreign investment.

The gap will not close on its own. After narrowing to $16.3 billion in 2025, the current account deficit is projected by the BSP to widen back to about 4% of GDP in 2026 and 2027. That projection sets the near-term yardstick for the debate, and the central bank's regular balance-of-payments reports are where the gap will be tracked against it.

How large an export push would be needed? Because imported inputs account for about 24% of the value of Philippine exports, each new export dollar nets roughly 76 cents. Closing a deficit of $16 billion to $20 billion on a sustained basis would require an estimated $40 billion to $50 billion in additional annual export earnings over the next five to seven years.

An Export Agenda

The book's closing chapter, authored by Lamberte, turns these findings into a policy agenda. Five priorities stand out.

First, diversify beyond chips. The next wave of exports should come from sectors where the country already has a foothold: processed food, mineral processing, shipbuilding, automotive and electric-vehicle components, and medical devices. In agriculture, the book calls for a shift from rice toward high-value exports and the dismantling of remaining quantitative restrictions. Services exports should expand beyond call centers into medical tourism and the creative industries. Technical assistance can help export-oriented small and medium enterprises plug into global value chains, while trade agreements widen market access — the Regional Comprehensive Economic Partnership, the pact linking the ten ASEAN members with China, Japan, South Korea, Australia, and New Zealand, in force for the Philippines since 2023, is the obvious platform.

Second, point incentives at tradeables. Too much capital has flowed into property, retail, and other sectors that do not earn dollars. The CREATE MORE Act — formally the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy law — made incentives performance-based, but these should be tied explicitly to export earnings, an approach successfully implemented in South Korea. Incentives for servicification would encourage manufacturers to sell services such as design, logistics, and software. The book warns, however, that complex, poorly administered incentive regimes have in the past bred rent-seeking rather than competitive industries.

Third, make FDI stick. FDI has the largest effect in the model. The 2022 amendments to the Public Services Act, the Foreign Investments Act, and the Retail Trade Liberalization Act opened the door, but foreign firms still rank regulatory inefficiency and high utility costs among their top obstacles. Lamberte calls for revisiting the Ease of Doing Business law to strengthen the Anti-Red Tape Authority, down to the local government level, and for initiatives to cut power rates for manufacturers.

Fourth, keep the peso competitive. An overvalued currency costs exports, and the book endorses foreign exchange intervention, calibrated monetary policy, and macroprudential tools to prevent excessive appreciation when capital inflows surge. In the columnist's view, the time to hold that line is when inflows return — not after exporters have lost market share.

Fifth, repair the public balance sheet the right way. A stronger fiscal balance, achieved through a wider tax base and better collection, raises national savings and improves the current account. That is the savings agenda the evidence supports, and it is fiscal, not cultural. To ensure productive spending, a transparent budget process should help drastically cut leakage due to corruption.

The Real Lesson

BSP Governor Eli Remolona, Jr. was right that the Philippines saves less than it invests. Time series and cross-country data, however, show that the "mayabang" label was incorrect. The country's savings gap sits in the public accounts, not in the household budget. The economy needs to earn more dollars, expand the export base, and reduce import dependence, while the government needs to borrow less of the private sector's saving — and seriously cut the unsustainable fiscal leakage caused by flagrant corruption.

The BSP's own economists have mapped the way, the column concludes. That, the author argues, is where the discussion should go next.

Earlier installments of the series: Part 1; Part 2.

Originally published by BusinessWorld: https://bworldonline.com/opinion/2026/10/11/786058/not-mayabang-save-more-export-more-import-less/

Alexander C. Escucha is a past president of the Philippine Economic Society (PES 2005), a fellow of the Foundation for Economic Freedom (FEF), a board trustee and chairman of the UP Visayas Foundation (2014–2026), and a retired senior vice president of China Banking Corp.