Can domestic savings cover the country’s increasing investment needs?

The savings-investment gap (S-I) gap — the difference between gross domestic savings and gross capital formation — reflects a country’s ability to finance its overall investment needs. An S-I deficit happens when a country’s investment expenditures exceed its savings, that leads a country to borrow to fund the gap. In 2022, the country’s savings rate — gross domestic savings as share of gross domestic product (GDP) — reached 12% (P2.39 trillion) while the investment rate stood at 23.1% (P4.61 trillion) of GDP, resulting in a P2.22-trillion deficit. This was the widest gap on record or since the earliest record in 2000.