Domestic Liquidity Growth Eases Further in December

Preliminary data show that domestic liquidity (M3) grew by 11.9 percent year-on-year to about ?10.6 trillion in December 2017, slower than the 14.0-percent expansion in the previous month. On a month-on-month seasonally-adjusted basis, M3 decreased by 0.7 percent.

Domestic claims grew by 13.4 percent in December, lower than the 14.7-percent increase in November as growth in credit to the private sector eased to 15.7 percent from 16.0 percent. Growth in bank loans continued to be driven by lending to key production sectors such as real estate activities; electricity, gas, steam and airconditioning supply; wholesale and retail trade, repair of motor vehicles and motorcycles; manufacturing; and financial and insurance activities. Net claims on the central government likewise grew at a slower pace of 2.2 percent from 10.2 percent as the deposits of the National Government with the BSP increased, reflecting mainly the proceeds from the offering of Retail Treasury Bonds during the month.

Meanwhile, net foreign assets (NFA) in peso terms grew by 2.3 percent year-on-year in December from 1.9 percent in the previous month. Foreign exchange inflows coming mainly from overseas Filipinos’ remittances, business process outsourcing receipts, and foreign portfolio investments drove the increase in the BSP’s NFA position. The NFA of banks also continued to expand at a slower pace as growth in banks’ foreign assets eased on account of lower interbank loans and deposits with other banks.

The growth in M3 remains broadly consistent with the BSP’s prevailing outlook for inflation and economic activity. The BSP will continue to monitor domestic liquidity closely to ensure that monetary conditions remain conducive to maintaining price and financial stability.

Source: Bangko Sentral ng Pilipinas (BSP)

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