DESPITE faster growth in bank lending, the amount of money in circulation expanded more slowly in May, according to data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday.
Domestic liquidity (M3) grew 6.9 percent year on year to P15.3 trillion in May, easing from a 7.2-percent gain in April. Seasonally adjusted and month to month, M3 growth was largely unchanged.
Domestic claims increased by 8.9 percent year on year, slowing down from the revised 9.1-percent uptick in the previous month, the central bank reported. This improvement was "due to the improvement in bank lending to the private sector."
The BSP said, "meanwhile, net claims on the central government rose by 15.3 percent in May from 18.3 percent (revised) in April owing to the sustained borrowings by the national government."
Claims on the private sector rose by 7.5 percent in May, quicker than the 6.5-percent acceleration in April, as bank lending to non-financial private enterprises soared.
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The Bangko Sentral said its prevailing outlook for inflation and economic activity continues to be largely supported by domestic liquidity dynamics, stressing it "will continue to ensure that overall monetary conditions are conducive to maintaining price and financial stability."
Bank loans surged by 10.7 percent, which was a faster expansion than the 10.1 percent seen the month before. Commercial bank loans climbed monthly and seasonally adjusted by 1 percent.
Loans to locals inched up quicker at 10.6-percent net of reverse repurchases — than they had in April.
Due to an increase in loans for real estate activities (16.4 percent); manufacturing (16 percent); information and communication (27.1 percent); wholesale and retail trade, repair of motor vehicles and motorcycles (6.2 percent); and construction (12.3 percent), outstanding production loans improved faster in May at 10.8 percent than in April.
Additionally, consumer loans to residents jumped at a faster rate of 8.5 percent in May compared to April "with the year-on-year increase in credit card loans and salary-based general purpose consumption loans."
Outstanding nonresident loans picked up by 12.5 percent this month after growing by an adjusted 13.5 percent the previous month.
While maintaining consistency with its price and financial stability objectives, the central bank said it "will continue to ensure that the expansion in credit and liquidity proceeds in line with the outlook for inflation and economic growth."
In an outlook, Rizal Commercial Banking Corp. chief economist Michael Ricafort said bank loans and M3 growth could fundamentally expand in the upcoming months amid efforts to further reopen the economy toward greater normalcy.
Examples of such measures include the proposed nationwide Alert Level 1 status, the restart of traditional schooling, and increased local and international travel.