Preliminary data show that domestic liquidity (M3) grew by 13.5 percent year-on-year to about ₱10.0 trillion in July 2017, marginally higher than the 13.3-percent (revised) expansion in the previous month. On a month-on-month seasonally-adjusted basis, M3 increased by 1.4 percent.
Demand for credit remained the principal driver of money supply growth. Domestic claims grew by 15.7 percent in July, faster than the 15.4-percent increase in June due largely to sustained growth in credit to the private sector. Growth in bank loans has remained 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 grew by 13.0 percent during the month as a result of increased borrowings by the National Government.
Net foreign assets (NFA) in peso terms grew by 2.7 percent year-on-year in July, broadly steady from 2.8 percent in the previous month. Foreign exchange inflows coming mainly from overseas Filipinos’ remittances, business process outsourcing receipts, and foreign portfolio investments 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 subsidiaries and marketable debt securities.
The growth in M3 remains in line with the BSP’s prevailing outlook for inflation and economic activity. Going forward, the BSP will continue to closely monitor monetary conditions in order to ensure that domestic liquidity stays adequate to support the BSP’s price and financial stability objectives.