Preliminary data show that domestic liquidity (M3) grew by 9.2 percent year-on-year to about ₱11.6 trillion in December 2018. This was slightly faster than the 8.5-percent (revised) expansion in the previous month. On a month-on-month seasonally-adjusted basis, M3 decreased by 0.2 percent.
Demand for credit remained the principal driver of money supply growth. Growth in domestic claims was unchanged at 14.6 percent in December 2018 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 financial and insurance activities; wholesale and retail trade, repair of motor vehicles and motorcycles; real estate activities; manufacturing; electricity, gas, steam and airconditioning supply; and construction. Meanwhile, the growth in loans for household consumption slowed down marginally owing to weaker expansion in motor vehicle loans alongside a contraction in salary-based general purpose consumption loans and other types of household loans. Meanwhile, net claims on the central government grew by 16.4 percent in December, faster than the 12.2-percent (revised) growth in the previous month.
Net foreign assets (NFA) in peso terms expanded by 1.3 percent year-on-year in December, following a decline by 3.2 percent in the previous month. The BSP’s NFA position improved in December relative to November, reflecting the increase in gross international reserves. Meanwhile, the NFA of banks contracted, albeit at a slower pace, even as banks’ foreign assets continued to increase as a result of higher loans and investments in marketable debt securities.
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.