Domestic Liquidity Expands at a Faster Pace in October
Preliminary data show that domestic liquidity (M3) expanded by 8.5 percent year-on-
year to about P12.1 trillion in October 2019, faster than the 7.7-percent growth in
September. On a month-on-month seasonally-adjusted basis, M3 increased by 0.9 percent.
Demand for credit remained the principal driver of money supply growth. Domestic
claims grew by 6.7 percent in October from 7.5 percent 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 real estate activities; financial and
insurance activities; construction; electricity, gas, steam and airconditioning supply; and
wholesale and retail trade, repair of motor vehicles and motorcycles.
Loans for household consumption increased due to the growth in motor vehicle
loans, credit card loans, and salary-based general purpose consumption loans during the
month. Meanwhile, net claims on the central government grew by 6.5 percent in October
from 6.0 percent in September, reflecting the increased borrowings by the National
Government.
Net foreign assets (NFA) in peso terms expanded by 9.6 percent in October from
8.3 percent in the previous month. The BSP's NFA position increased during the month,
supported by foreign exchange inflows coming mainly from overseas Filipinos' remittances,
business process outsourcing receipts, and foreign portfolio investments. Similarly, the NFA
of banks increased as their foreign assets grew as a result o f higher 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.
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