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Domestic Liquidity Growth Decelerates in September

10.31.2018

Preliminary data show that domestic liquidity (M3) grew by 9.7 percent year-on-year to about ₱11.2 trillion in September 2018, slower than the 10.4-percent expansion in the previous month. On a month-on-month seasonally-adjusted basis, M3 increased by 0.1 percent.

Domestic claims grew by 14.5 percent in September, lower than the 15.0-percent increase in the previous month as growth in credit to the private sector eased. 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; real estate activities; manufacturing; financial and insurance activities; electricity, gas, steam and airconditioning supply; and construction. Meanwhile, the growth in loans for household consumption accelerated owing to the faster expansion in motor vehicle loans, credit card loans, and salary-based general purpose consumption loans. Likewise, net claims on the central government rose at a faster pace of 11.0 percent in September from 8.7 percent in August as a result of increased borrowings by the National Government.

Net foreign assets (NFA) in peso terms declined by 0.7 percent year-on-year in September after contracting by 1.3 percent in the previous month. The BSP’s NFA position declined in September relative to a year ago, reflecting the decrease in gross international reserves. 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 BSP is of the view that overall liquidity conditions remain supportive of the country’s growth requirements. The BSP will continue to closely monitor domestic liquidity dynamics to ensure that monetary conditions remain conducive to price and financial stability.

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