During the last 30 years, the swing in world economic performance has been conditioned by the oscillation in savings and investment. This can be gleaned from the slump in world production which coincided with the 3 percent fall in world savings and the 2 percent decline in world investment. This paper looks at the linkage between savings, investment, the current account balance and growth. In particular, it discusses outstanding measurement issues, and identifies indicators that complement traditional measures of savings and investment. The study revealed that in the Philippines, the decline in savings and investment has adversely affected growth. Weak savings resulted from the declining intensity of household savings which can be rooted from high dependency rates, large public deficit, low deposit interest rate and low growth. The anemic state of investment, on the other hand, stems partly from high cost of capital, low utilization rate, shocks to productivity, low capital labor ratio and increasing risk posed by foreign capital inflow.
