Preliminary data show that domestic liquidity (M3) grew by 11.0 percent year-on-year to about ₱11.1 trillion in July 2018, slower than the 11.8-percent (revised) expansion in the previous month. On a month-on-month seasonally-adjusted basis, M3 increased by 0.6 percent.
Domestic claims grew by 16.1 percent in July, unchanged from the growth in the previous month. Loans for production activities continued to be driven by lending to key sectors such as wholesale and retail trade, repair of motor vehicles and motorcycles; financial and insurance activities; real estate activities; manufacturing; electricity, gas, steam and airconditioning supply; and construction. Meanwhile, loans for household consumption decelerated owing to the contraction in salary-based general-purpose consumption loans and other types of household loans, as well as the slower increase in motor vehicle loans. Net claims on the central government also rose at a slower pace of 12.3 percent in July from 12.8 percent (revised) in June, even as borrowings by the National Government continued to increase.
Similarly, net foreign assets (NFA) in peso terms grew by 0.1 percent year-on-year in July from 2.8 percent (revised) in the previous month. The BSP’s NFA position declined in July relative to June, reflecting the decrease in gross international reserves. Meanwhile, the NFA of banks also continued to increase, albeit at a slower pace, as a result of higher loans and investments in marketable debt securities.
The overall growth in M3 remains in line with the BSP’s prevailing outlook for inflation and economic activity. The BSP will continue to closely monitor domestic liquidity dynamics to ensure that monetary conditions remain conducive to maintaining price and financial stability.