Domestic liquidity—or M3—is rising, mostly because businesses and households asked and were awarded loans totalling P7.6 trillion in May.
But the Bangko Sentral ng Pilipinas quickly brushed aside any notion of danger down the road, saying the 9.3-percent expansion in money available to Filipinos in general remain adequate for the country’s sustained growth goal this year and next.
The continued liquidity expansion was faster than the 9-percent acceleration reported in April, but slower than the double-digit growth posted the previous year.
At this level, the BSP said M3 growth is just about right, the monetary authorities having earlier projected the aggregate to continue to grow by 7 percent to 8 percent.
“The continued expansion in domestic liquidity during the month indicates that liquidity remains sufficient to sustain the economy’s growth trajectory,” the BSP said in a statement.
The acceleration was attributed to sustained demand for credit. In a separate statement, the BSP said the outstanding loans of commercial banks, net of so-called reverse repurchase placements with the BSP, grew at a slower pace of 14.5 percent in May from 15.4 percent in April.
This was attributed to the expansion of loans for production activities, which took up four-fifths of the total loans of the banking system during the period.
Loans for production activities grew by 14.1 percent in May from 15.1 percent in April.
The expansion in production loans was driven primarily by increased lending to the real estate, renting and business services at 12.9 percent; manufacturing sector also 12.9 percent; wholesale and retail trade, likewise, at 12.9 percent ; electricity, gas and water also at 12.9 percent; and financial intermediation at 15.1 percent.