Preliminary data show that domestic liquidity (M3) grew by 10.4 percent year-on-year to about ₱11.2 trillion in August 2018, slower than the 11.0-percent expansion in the previous month. On a month-on-month seasonally-adjusted basis, M3 increased by 1.0 percent.
Domestic claims grew by 15.0 percent in August, slower than the 16.1-percent growth in the previous month owing to the slower growth in credit to the private sector. 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 credit card loans and motor vehicle loans, as well as the decline in salary-based general-purpose consumption loans and other types of household loans. Net claims on the central government also rose at a slower pace of 8.7 percent in August from 12.3 percent in July on account of higher deposits of the National Government with the BSP.
Meanwhile, net foreign assets (NFA) in peso terms contracted by 1.3 percent year-on-year in August from a 0.1-percent growth in the previous month. The BSP’s NFA position declined in August relative to a year ago, reflecting the decrease in gross international reserves. Meanwhile, the NFA of banks also contracted as banks’ foreign assets grew at a slower pace relative to the growth in their foreign liabilities. Banks’ foreign liabilities expanded due mainly to the higher placements and deposits made by foreign banks with their local branches.
The overall pace of growth in M3 remains in line with the BSP’s outlook for inflation and economic activity. The BSP will continue to closely monitor domestic liquidity dynamics to ensure that monetary conditions remain conducive to price and financial stability.