Preliminary data show that domestic liquidity (M3) grew by 11.3 percent year-on-year to ₱9.6 trillion in May 2017, sustaining the 11.2-percent expansion in the previous month. On a month-on-month seasonally-adjusted basis, M3 increased by 1.2 percent.
Demand for credit remains the principal driver of money supply growth. Domestic claims grew by 14.3 percent in May, faster than the 13.8-percent growth in April due largely to sustained growth in credit to the private sector. Growth in bank loans remains strong on account of lending to key production sectors such as real estate activities; electricity, gas, steam and airconditioning supply; manufacturing; wholesale and retail trade, repair of motor vehicles and motorcycles; and information and communication. Meanwhile, net claims on the central government expanded by 8.9 percent during the month as a result of increased borrowings by the National Government.
Net foreign assets (NFA) in peso terms grew by 4.6 percent year-on-year in May from 3.6 percent in the previous month. Foreign exchange inflows coming mainly from overseas Filipinos’ remittances and business process outsourcing receipts continued to be the drivers behind the increase in the BSP’s NFA position. Meanwhile, the NFA of banks expanded due to the growth in banks’ foreign assets resulting from higher loans and investments in marketable debt securities.
The growth in M3 remains consistent with the BSP’s prevailing outlook for inflation and economic activity. Going forward, the BSP will continue to monitor domestic liquidity closely to ensure that monetary conditions remain conducive to maintaining price and financial stability.