Philippine Liquidity Growth Eases

Domestic Liquidity Growth Eases in November 2020

Preliminary data show that domestic liquidity (M3) expanded by 10.5 percent year-on-year to about ₱13.7 trillion in November. This was slower than the 11.6-percent (revised) growth in October. On a month-on-month seasonally-adjusted basis, M3 increased by 0.5 percent.

Domestic claims grew by 6.7 percent year-on-year in November from 8.0 percent (revised) in the previous month as bank lending remained weak. Growth in loans for production activities declined on slower lending to key industries, including wholesale and retail trade and repair of motor vehicles and motorcycles as well as manufacturing. Similarly, consumer lending also eased due mainly to lower credit card and motor vehicle loans. Meanwhile, net borrowings by the central government expanded by 40.7 percent in November from 46.6 percent (revised) in the previous month, due in part to the sustained borrowings by the National Government.

Net foreign assets (NFA) in peso terms expanded by 22.9 percent year-on-year in November after rising by 23.3 percent in October. The expansion in the BSP’s NFA position reflected the increase in the country’s gross international reserves during the month. Meanwhile, the growth in the NFA of banks increased as banks’ foreign liabilities contracted mainly on account of lower foreign bills payables.

The overall stance of monetary policy remains accommodative. Going forward, the BSP will continue to be vigilant in monitoring domestic liquidity dynamics and stands ready to deploy further monetary measures as needed, in line with its commitment to support domestic economic activity amid the COVID-19 pandemic while maintaining price stability.