The growth in domestic liquidity accelerated in January, making monetary officials optimistic that there will be enough resources to support higher consumption and investments, thus boosting the country’s economic growth.
The Bangko Sentral ng Pilipinas said in a report Friday that the growth in cash and other liquid assets was due mainly to the increase in remittances sent home by Filipinos abroad and borrowings by private and government entities.
The BSP said domestic liquidity, measured in terms of “M3,” rose by 7.2 percent to P4.48 trillion in January from the same month last year, which is faster than the 6.3 percent year-on-year increase registered in December.
M3, a broad measure of liquidity, includes currencies in circulation, bank deposits and highly liquid securities. M1 covers currencies in circulation while M2 includes currencies and bank deposits.
“The steady growth in domestic liquidity indicates that resources in the financial system can amply fund the economy’s growth requirements,” the BSP said in a statement.
The government expects the economy to grow by 5 to 6 percent this year.
The economy grew by only 3.7 percent last year versus the three-decade-high of 7.6 percent in 2010 due to the global economic crisis that pulled down demand for exports from exporting countries such as the Philippines.
Economic managers hope domestic demand will further rise this year, given expectations that exports may still be weak.
One way to boost local demand is to make available loans to fund expansion projects.