Domestic credit, or the outstanding loans from banks and other lending institutions in the country, posted a double-digit increase in the first quarter as appetite for spending and investments boosted demand for loans.
Data from the Bangko Sentral ng Pilipinas showed that domestic credit grew by 12.5 percent in the first quarter from a year ago, much faster than the 7.2 percent registered in the same period last year.
As a result, BSP data also showed that domestic credit-to-GDP ratio improved to 48.7 percent in the first quarter from 46.7 percent in the same period a year ago. The ratio is the proportion of domestic credit to the country’s estimated gross domestic product for the year.
Monetary officials said the increase in credit within the country reflects growing demand for loans on the back of a relatively favorable consumer and business sentiment.
An increase in investments by local firms has been witnessed recently together with a rise in demand for loans that support their expansion and operations, they said.
Consumers and households also exhibited higher demand for loans. Officials said this is partly because of growing remittances, which gave the recipients confidence in buying big-ticket items—such as residential units and automobiles—and for investing in microenterprises with the help of loans from banks and other creditors.
But officials said credit is growing also because of ample supply of liquidity, which fuels the appetite of banks and other lending institutions to extend more loans.
They said credit growth in the first quarter helped the economy grow by a faster-than-expected rate of 6.4 percent, and bringing the full-year growth target of 5 to 6 percent within reach.