MORE FUNDS circulated in the economy in May, with money supply sustaining its double-digit growth and bank lending also growing at a similar pace, the Bangko Sentral ng Pilipinas (BSP) said on Friday.
Domestic liquidity or M3, the broadest measure of money in an economy, grew by 11.3% last month to reach P9.6 trillion from the P8.7 trillion during the same period in 2016. It was also faster than the 11.2% reading in April which amounted to P9.5 trillion.
The BSP said in a statement that sustained demand for credit remained as the principal driver of money supply growth. Month on month, liquidity increased by 1.2%.
Domestic claims during the period rose by 14.3% from a year ago, faster than the 13.8% growth seen in April due largely to sustained growth in credit to the private sector.
Growth in bank loans remains strong on account of lending to key production sectors such as real estate activities; electricity, gas, steam and airconditioning supply; manufacturing; wholesale and retail trade, repair of motor vehicles and motorcycles; and information and communication.
On the other hand, net claims on the national government rose by 8.9% during the month as the state took on more loans, the central bank said.
Meanwhile, net foreign assets (NFA) — expressed in peso terms — posted a 4.6% increase year-on-year coming from a 3.6% uptick the previous month.
“Foreign exchange inflows coming mainly from overseas Filipinos’ remittances and business process outsourcing receipts continued to be the drivers behind the increase in the BSP’s NFA position,” the BSP said.
Net foreign holdings held by local banks also expanded due to the growth in banks’ foreign assets resulting from higher loans and investments in marketable debt securities.
“The growth in M3 remains consistent with the BSP’s prevailing outlook for inflation and economic activity. Going forward, the BSP will continue to monitor domestic liquidity closely to ensure that monetary conditions remain conducive to maintaining price and financial stability,” the central bank’s statement read.
The government is targeting a 6.5-7.5% gross domestic product growth this year, which if realized would keep the Philippines as one of the fastest-growing in the world. In the first quarter, the economy grew slower than expected at 6.4%, although Socioeconomic Planning Secretary Ernesto M. Pernia had said that growth is likely to pick up during the second quarter.
The BSP also reported yesterday that bank lending grew by 18.7% in May from a year ago, although it moderated from the 19.2% rise seen in April, according to central bank data.
Month on month, total lending rose by 1.7%.
Computed to include reverse repurchase deals entered into by the banks, total lending grew by 17.4% in May, against 16% a month prior.
“The growth in production loans was driven primarily by increased lending to the following sectors: real estate activities (17.1%); electricity, gas, steam and airconditioning supply (24.8%); manufacturing (10.9%); wholesale and retail trade, repair of motor vehicles and motorcycles (10.6%); and information and communication (36.2%),” the BSP said, noting that bank lending to other sectors also increased during the month.
Meanwhile, consumer lending increased by 23.6% in May due to the expansion in credit card loans as well as sustained growth in auto loans and salary-based general purpose loans, offsetting the contraction in other types of household loans.
Looking ahead, the BSP said it “will continue to ensure that the expansion in domestic credit and liquidity conditions proceeds in line with overall economic growth while remaining consistent with the BSP’s price and financial stability objectives.” — Imee Charlee C. Delavin