JAKARTA - Economy liquidity or money in circulation in a broad sense (M2) grew slowly in December 2019. M2 position in December 2019 was recorded at Rp 6,136.5 trillion or grew 6.5% (yoy), lower than the previous month's growth of 7.1% (yoy). The slowing growth in M2 was caused by slowing growth in the money supply component in narrow terms (M1) and securities other than shares.
Money in circulation in narrow terms (M1) grew slower, from 10.5% (yoy) in November 2019 to 7.5% (yoy) in December 2019, mainly due to slowing growth in currency and demand deposits of rupiah. The slowdown also occurred in securities other than shares, from 31.3% in the previous month to 26.5% (yoy) in December 2019. Meanwhile, the quasi-money component grew, mainly driven by the growth of foreign currency demand deposits, so that it was a deterrent to slowing deeper money supply growth.
Based on influencing factors, the slowdown in M2 in December 2019 was caused by slowing growth in net foreign assets and net domestic assets. Growth in net foreign assets slowed down from 4.6% (yoy) in November 2019 to 4.4% (yoy).
Meanwhile, the slowing growth in net domestic assets was mainly contributed by lending slowing to 5.9% (yoy) from the previous month's achievement of 7.0% (yoy). On the other hand, government financial operations recorded an expansion of 3.7% (yoy), higher than the previous month's expansion of 2.4% (yoy). The expansion of government operations is at the same time a deterrent to further M2 slowdown. (LM)