Money Supply Picks Up While Bank Lending Moderates In October

Economic Research	30 November 2016
Philippines
Economic Highlights
Money Supply Picks Up While Bank Lending Moderates In October The broad money supply (M3) growth in the Philippines edged up to 12.8% y-o-y in October, from +12.7% in September and +11.9% in August, underpinned by an acceleration in domestic claims. Meanwhile, outstanding loans of commercial banks, inclusive of reverse repurchase placements (RRP) with the central bank, eased to +16.2% y-o-y in October, from +16.5% in September and +15.9 in August, on account of slower growth in loans extended to households while business loan growth stabilised. Going forward, the BSP will likely maintain its key policy rate at 3.0% for the rest of 2016 and in 2017, as inflation remains manageable and economic growth will likely hold up relatively well. Separately, the Philippines’ gross international reserves decreased to USD85.8bn in October, following an increase of USD0.3bn in September. Moving forward, the peso is expected to stay weak at around PHP50.00/USD by end-2016 and trade towards 50.50/USD by end-2017, from PHP46.86/USD by end-2015, contributed partly by a shrinking current account surplus in the balance of payments. Economist:  Rizki Fajar  | +6221 2970 7065