Money supply growth dips to 7.3% in April

Money supply growth dips to 7.3 percent in April The Bangko Sentral ng Pilipinas (BSP) said Thursday the country’s money supply growth last April was slower by 3 percentage points compared to March. Domestic liquidity increased by 7.3 percent in April, significantly slower compared to the 10.3 percent expansion last March. Domestic liquidity is the amount of money in circulating in the economy going after goods and services, contributing to inflation. “The steady expansion in net foreign assets (NFA) — at 20.2 percent in April — fueled the growth of domestic liquidity," the BSP said in a statement. The BSP added that its “NFA position grew by 41.3 percent due in part to sustained foreign exchange inflows from overseas remittances as well as portfolio and direct investments." The slowdown came soon after the Aquino administration’s economic planners said they will explore the feasibility of increasing public spending so the target 7 to 8 percent gross domestic product (GDP) growth can be met. The National Statistical Coordination Board said the GDP expanded by only 4.9 percent in the first quarter, from 7.3 percent a year earlier, due to lower government spending, which fell by 17.2 percent — based on 2000 prices — to P130 billion from P157 billion. In contrast, consumer spending rose by 4.9 percent to P968 billion while private business raised capital by 37 percent to P336 million, according to the NSCB. BSP Deputy Governor Diwa Gunigundo earlier told reporters that domestic liquidity can grow by 10 to 13 percent, not raise inflation pressures, and still enable the country to meet the GDP growth target of 7 to 8 percent. The BSP Monetary Board will meet June 16 — the third time this year — to closely monitor monetary conditions to ensure that the amount of liquidity in the financial system remains in line with the BSP's price and financial stability objectives." The Hongkong Shanghai and Banking Corporation said the BSP now has room to keep its interest rates steady. — ELR/VS