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M3 Growth Speeds Up to 8.9 Percent in September


Domestic liquidity (M3) growth accelerated for the third consecutive month to 8.9 percent as of end-September 2002 compared to 7.7 percent year-on-year expansion registered in the previous month. The month-on-month growth in M3 also displayed an expansion for the second consecutive month in September at 1.6 percent from 0.4 percent in August 2002. Domestic liquidity reached P1.58 trillion as of end-September 2002.

The expansion in the net foreign assets (NFA) of deposit money banks combined with the increase in public sector credits, particularly to the National Government, remained the driving force to the improving pace of the growth in money supply. The foreign exchange purchases by banks from the private non-bank sector, mainly from remittances of overseas Filipino workers (OFWs) helped improve the level of NFA of the monetary system.

Meanwhile, the 7.7 percent year-on-year growth in the level of credits to the National Government as of end-September 2002 was partly offset by the 2.7 percent contraction in private sector credit—which, however, was lower than the 3.9 percent decline posted in the previous month.

The strengthening demand for money during the period continues to point to firmer domestic demand in recent months, which is expected to continue in the coming months as the holiday season approaches. Leading indicators of demand support this expectation. The average capacity utilization of manufacturing firms recovered to 74.9 percent in August 2002 from 74.1 percent (revised) in July 2002. Energy sales by Meralco also picked up in September, growing by 3.7 percent year-on-year from the decline of 1.5 percent in the previous month. Likewise, personal consumption spending continued to be robust as indicated by the 7.8 percent quarter-on-quarter increase and 33.5 percent year-on-year growth in credit card receivables. Meanwhile, merchandise exports also kept its year-on-year rise in September 2002 at 16.8 percent since its upturn beginning April 2002 at 22.4 percent after posting 13 months of decline.

Going forward, the BSP will continue to provide the necessary liquidity supportive of ensuring a sustainable economic growth path consistent with the BSP’s primary objective of maintaining price stability.

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