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Domestic Liquidity Growth Decelerates Further in November

01.08.2008

Based on the Depository Corporations Survey (DCS), the growth of domestic liquidity or M3 slowed down anew to 9.1 percent year-on-year from 11.4 percent in the previous month. This brings M3 growth for the first 11 months of the year to an average of 18.2 percent, which remains above the BSP’s 2007 program growth for M3 of 11-13 percent. On a monthly basis, seasonally adjusted M3 continued to decrease by 0.2 percent, compared to the 1.7 percent decline posted in October.

Reflective of strong foreign exchange inflows from overseas Filipino (OF) remittances, exports, and investments (both direct and portfolio), net foreign assets (NFA) of depository corporations continued to expand, although at a slower pace of 25.6 percent year-on-year compared to the 29.7 percent expansion recorded in October. The BSP and other depository corporations recorded a slower increase in foreign assets as they accelerated the payment of their foreign liabilities.

Growth in net domestic assets (NDA) slowed for the fourth consecutive month to 4.7 percent from 6.0 percent in the preceding month, as the Net Other Items account (which includes SDAs and RRPs) sustained a negative balance following the policy measures implemented by the BSP in May. The growth of credit extended to the public sector decelerated to 4.0 percent in November from 8.3 percent in the previous month due largely to the lower net credit granted to the NG (mainly thru higher deposits with the BSP). In contrast, the growth of credit extended to the private sector rose to 5.7 percent from 4.8 percent in the previous month.

The BSP will continue to monitor closely the developments in domestic liquidity to ensure that monetary conditions are consistent with a low-inflation environment while supportive of the economy’s growth requirements. 

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