Demand for money strengthened further in April as domestic liquidity or M3 growth accelerated to 12.4 percent year-on-year (y-o-y) from 10.3 percent in the previous month. On a monthly basis, seasonally-adjusted M3 growth, likewise, rose to 1.8 percent in April compared to 1.1 percent (revised) in March.
The sustained expansion in domestic liquidity was driven largely by the continued robust, although slightly lower, growth of net foreign assets (NFA) in April at 16.6 percent y-o-y compared to 18.0 percent in March. The growth in the NFA position of the BSP accelerated to 14.7 percent (from 14.0 percent in the previous month), buoyed up by the continued build up of its international reserves amid strong foreign exchange inflows from portfolio investments and remittances from overseas Filipinos. Growth in the NFA of depository corporations remained strong at 27.7 percent but was lower than the previous month’s growth of 39.8 percent as the expansion of foreign liabilities accelerated.
Net domestic assets (NDA) grew at a faster pace in April, rising by 7.3 percent from 2.4 percent a month ago, buoyed up by the steady growth of domestic credit at 8.2 percent. The growth of domestic credit was driven mainly by the expansion of lending to the private sector at 7.0 percent in April. Public sector credit also increased as lending growth to the National Government was broadly stable at 9.5 percent while credit growth to local governments and other public entities accelerated to 13.8 percent in April.
According to Governor Amando M. Tetangco, Jr., the steady expansion in domestic liquidity could be traced, in part, to renewed capital inflows resulting from improved risk appetites for Asian emerging market economies. He noted that going forward the BSP will continue to monitor closely liquidity conditions in light of the strengthening economic activity, consistent with the BSP’s price and financial stability objectives.