Money supply grew only slightly in May amid slower bank lending as loans for production activities and households moderated, the Bangko Sentral ng Pilipinas (BSP) said on Friday.
Domestic liquidity, or M3, rose by 11.3 percent to P9.6 trillion in May, from 11.2 percent in April. Month-on-month, M3 grew by a seasonally adjusted 1.2 percent.
Focusing on the sustained strength of domestic demand, the central bank said, “Demand for credit remains the principal driver of money supply growth.”
The expansion of money supply indicates it “remains sufficient to support economic growth,” the BSP said in a statement.
Domestic claims grew by 14.3 percent, faster than 13.8 percent in April, “due largely to sustained growth in credit to the private sector.”
Despite a slowdown, 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.
Lending to the public sector expanded by 8.9 percent, faster than 4.3 percent in the preceding month “as a result of increased borrowings by the national government.”
Net foreign assets (NFA) grew by 4.6 percent in peso terms from 3.6 percent, the central bank said, noting that its own NFA position continued to expand due to robust foreign exchange inflows, mainly from overseas Filipinos’ remittances and business process outsourcing receipts.
Banks’ foreign assets expanded on the back of higher loans and investments in marketable debt securities.