Preliminary data show that domestic liquidity (M3) grew by 9.3 percent year-on-year in May 2015 to reach P7.6 trillion. This was slightly faster than the 9.0-percent expansion recorded in April. On a month-on-month seasonally-adjusted basis, M3 increased by 0.7 percent.
Money supply continued to increase due largely to sustained demand for credit. Domestic claims grew by 9.6 percent in May from 9.3 percent in April as credits to the private sector continued to increase, albeit at a slower pace relative to the previous month. The bulk of bank loans during the month was channeled to key production sectors such as real estate, renting, and business services, manufacturing, wholesale and retail trade, utilities, and financial intermediation. Meanwhile, net public sector credit contracted at a slower pace of 3.5 percent in May relative to a 7.9-percent decline a month earlier.
Net foreign assets (NFA) in peso terms grew at a slightly slower pace of 8.3 percent in May from 8.8 percent in the previous month. The BSP’s NFA position continued to expand during the month on the back of robust foreign exchange inflows coming mainly from overseas Filipinos’ remittances and business process outsourcing receipts. The NFA of banks likewise increased as banks’ foreign assets expanded, while their foreign liabilities contracted. Banks’ foreign assets increased due largely to the growth in their investments in marketable debt securities and deposits with other banks, while banks’ foreign liabilities decreased on account of lower placements made by foreign banks with their local branches.
The continued expansion in domestic liquidity during the month indicates that liquidity remains sufficient to sustain the economy’s growth trajectory. Going forward, the BSP will closely monitor monetary conditions to ensure that liquidity in the financial system remains in line with the BSP’s price and financial stability objectives.