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Domestic Liquidity Continues to Expand in October

12.05.2017

Preliminary data show that domestic liquidity (M3) grew by 14.8 percent year-on-year to about ₱10.3 trillion in October 2017, slightly faster than the 14.5-percent expansion in the previous month. On a month-on-month seasonally-adjusted basis, M3 increased by 1.3 percent.

Domestic claims grew by 15.2 percent in October, lower than the 16.1-percent increase in September as growth in credit to the private sector eased to 16.5 percent from 18.3 percent in the previous month. Nevertheless, growth in bank loans remained robust on account of lending to key production sectors such as electricity, gas, steam and airconditioning supply; real estate activities; wholesale and retail trade, repair of motor vehicles and motorcycles; financial and insurance activities; information and communication; and manufacturing.

Meanwhile, net foreign assets (NFA) in peso terms grew by 6.1 percent year-on-year in October from 0.1 percent (revised) 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. The NFA of banks likewise expanded due to the growth in banks’ foreign assets as a result of 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 are conducive to maintaining price and  financial stability.

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