Domestic Liquidity Growth Accelerates in December

Preliminary data show that domestic liquidity (M3) expanded by 11.4 percent year-on-year to about ?13.0 trillion in December 2019, faster than the 9.8-percent growth in November. On a month-on-month seasonally-adjusted basis, M3 increased by 1.6 percent.

Demand for credit remained the principal driver of money supply growth. Domestic claims grew by 10.5 percent in December from 8.3 percent in November 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 real estate activities; financial and insurance activities; electricity, gas, steam and airconditioning supply; construction; and information and communication.

Loans for household consumption increased due to faster growth in credit card and salary-based consumption loans during the month. Meanwhile, net claims on the central government rose by 24.4 percent in December from 13.9 percent in November, due in part to the decline in deposits by the National Government with the BSP.

Net foreign assets (NFA) in peso terms expanded by 8.8 percent in December from 11.5 percent in the previous month. The BSP's NFA position grew during the month, supported by foreign exchange inflows coming mainly from overseas Filipinos' remittances and business process outsourcing receipts. Similarly, the NFA of banks increased due to the sustained expansion in banks' foreign assets resulting from the growth in loans and investments in marketable debt securities.

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

Source: Bangko Sentral ng Pilipinas (BSP)