Economist sees sustained growth in money supply and bank lending in fourth quarter

Domestic liquidity, or the money supply circulating in the financial system, and bank lending are expected to increase more rapidly in the coming months as the economy continues to recover from the impact of the global health crisis, an official said on Tuesday. economist.

The latest data from Bangko Sentral ng Pilipinas showed bank lending rose 13.4% in September from a year ago, faster than 12.2% in August, helped by buoyant demand for credit.

Domestic liquidity or M3 slowed 5.0% year-on-year to around 15.4 trillion pesos in September, after expanding 6.7% in August. The data showed that on a seasonally adjusted monthly basis, M3 fell by 0.2%.

“For the coming months, bank lending and M3 growth could pick up fundamentally further as part of measures to further reopen the economy to greater normality,” said Rizal Commercial’s chief economist. Banking Corp., Michael Ricafort, in a report.

Ricafort said those measures included the proposed nationwide Alert Level 1 and the resumption of in-person schooling. The government is aiming for 100% of public schools to provide physical lessons by November, while blended learning is still allowed for private schools.

He said the measures were in line with the government’s 8-point program to mitigate the negative economic effects of Russia’s invasion of Ukraine for more than eight months or since February 24, 2022.

“[These] would help to further increase economic activities as well as the demand for loans/credits…” said Ricafort.

He said excess liquidity in the financial system could also have been reduced for the month of September, given the 420.4 billion peso retail Treasury bond issue settled on September 7, of which 311.9 billion pesos which represented new borrowing which was effectively being siphoned off by the national government.

The BSP said earlier that the continued expansion of lending activity and ample liquidity would support the recovery in economic activity and domestic demand.

Outstanding loans to residents, net of reverse repos, increased by 13.0% in September after expanding by 12.1% in August.

Consumer loans to residents also rose 20.5% in September from 18.3% in August, driven by year-on-year increases in credit card loans, auto loans and consumer loans to residents. general purpose based on wages.

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