Photo from Mediamerge Corporation BSP “Loans for production activities continued to be driven by lending to key sectors.

Domestic liquidity (M3) was moderated in June, expanding by 11.7 percent year-on-year to about 11.1 trillion in June 2018, slower than the 14.3-percent growth in the previous month. On a month-on-month seasonally-adjusted basis, M3 decreased by 0.1 percent.

Preliminary data released by the Bangko Sentral ng Pilipinas (BSP) showed that domestic claims rose at a slower pace of 16.0 percent last month from 16.8 percent in May.

The expansion in bank lending eased slightly as growth in loans for household consumption decelerated.

Meanwhile, loans for production activities continued to be driven by lending to key sectors such as wholesale and retail trade, repair of motor vehicles and motorcycles; real estate activities; financial and insurance activities; manufacturing; electricity, gas, steam and airconditioning supply and other community, social and personal activities.

Net claims on the central government rose by 12.5 percent in June from 17.3 percent in May even as borrowings by the national government continued to increase.

Similarly, net foreign assets (NFA) in peso terms grew by 2.4 percent year-on-year in June from 5.4 percent in the previous month. The BSP’s NFA position declined in June relative to May, reflecting the decrease in gross international reserves.

Meanwhile, the NFA of banks also expanded at a slower pace, even as it continued to increase as a result of higher loans and investments in marketable debt securities.

The overall pace of growth in M3 remains in line with the BSP’s prevailing outlook for inflation and economic activity.

The BSP will continue to closely monitor domestic liquidity dynamics to ensure that monetary conditions remain conducive to support the BSP’s price and financial stability objectives.