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Domestic Liquidity Expands in November

01.08.2019

Preliminary data show that domestic liquidity (M3) grew by 8.4 percent year-on-year to about ₱11.3 trillion in November 2018. This was slightly faster than the 8.3-percent (revised) expansion in the previous month. On a month-on-month seasonally-adjusted basis, M3 increased by 0.5 percent.

Demand for credit remained the principal driver of money supply growth. Domestic claims grew by 14.6 percent in November 2018 from 15.2 percent in October due mainly to the sustained 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, the growth in loans for household consumption slowed down owing to weaker expansion in credit card loans and motor vehicle loans alongside a contraction in salary-based general purpose consumption loans and other types of household loans. In contrast, net claims on the central government grew by 12.1 percent in November, faster than the 11.2-percent (revised) growth in the previous month.

Net foreign assets (NFA) in peso terms contracted by 3.2 percent year-on-year in November, following a decline by 5.0 percent (revised) in the previous month. The BSP’s NFA position improved in November relative to October, reflecting the increase in gross international reserves. Meanwhile, the NFA of banks fell due to the slower expansion in banks’ foreign assets as growth in loans and investments in marketable debt securities eased.

The BSP will continue to closely monitor domestic liquidity dynamics to ensure that overall monetary conditions remain in line with maintaining price and financial stability.

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