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Domestic Liquidity Growth Increases in April

05.31.2019

Preliminary data show that domestic liquidity (M3) grew by 7.0 percent year-on-year to about ₱11.7 trillion in April 2019, faster than the 6.1-percent (revised) expansion in March 2019. On a month-on-month seasonally-adjusted basis, M3 increased by 1.5 percent.

Demand for credit eased slightly but remained the principal driver of money supply growth. Domestic claims grew by 9.5 percent in April from 9.8 percent (revised) in the previous month 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; real estate activities; wholesale and retail trade, repair of motor vehicles and motorcycles; construction; manufacturing; and electricity, gas, steam and airconditioning supply.

Meanwhile, loans for household consumption grew faster amid the acceleration in credit card loans and motor vehicle loans, even as this was slightly offset by the slower growth in salary-based general purpose consumption loans and other types of household loans. Similarly, net claims on the central government expanded by 0.5 percent in April from 0.2 percent (revised) in the previous month.

Net foreign assets (NFA) in peso terms grew by 3.8 percent in April from 2.1 percent (revised) in March. The BSP’s NFA position continued to expand during the month, supported by foreign exchange inflows coming mainly from overseas Filipinos’ remittances and business process outsourcing receipts. By contrast, the NFA of banks decreased as their foreign liabilities rose due to increased placements and deposits made by foreign banks with their local branches and other banks.

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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