Domestic liquidity or M3, really just money allowed by the Bangko Sentral ng Pilipinas (BSP) to circulate freely in the financial system, grew at an annual pace of 9.8 percent in January this year.
Totaling more or less P15.3 trillion, this compared with domestic liquidity growth of 7.3 percent in December last year and translates to a month-on-month growth of 2.8 percent seasonally adjusted.
This much money in the system, however, did not result to an uptick in inflation, which stood lower during the month to only 3 percent from 3.2 percent the previous December.
According to the BSP, the financial system put that much liquidity in the system to good use by boosting lending among banks, the activity having grown at the annual pace of 8.5 percent from the revised 4.8 percent reported the month before.
“Bank lending improved further as easing COVID-19 restrictions and the continuous vaccine rollout supported market sentiment and demand. On a month-on-month seasonally-adjusted basis, outstanding universal and commercial bank loans, net of RRPs, rose by 3.0 percent,” the BSP reported.
Outstanding loans to residents, net of the borrowings of the BSP, went up by 8.7 percent in January from 4.8 percent in December, given the faster growth in loans for production activities.
Outstanding loans for production activities increased by 9.6 percent in January from 6.0 percent (revised) in December due to the expansion in credit activity for real estate activities (16.8 percent); financial and insurance activities (17.1 percent); information and communication (31.4 percent); and manufacturing (11.5 percent).
Similarly, consumer loans to residents increased marginally by 0.1 percent in January after a 5.9-percent decline (revised) in the previous month, driven mainly by the year-on-year rise in credit card loans. This is the first time household loans posted growth since December 2020. Outstanding loans to non-residents[1] also rose by 2.8 percent in January from 2.5 percent in the previous month.
