Korea’s money supply grew at the slowest clip in more than seven years in May as the government’s tax receipt rose and foreign stock funds flowed out of the country, the central bank said Wednesday.

The country’s M2, a narrow measure of its money supply, reached 1,690.5 trillion won ($1,587 trillion) in May, up 3.7 percent from a year earlier, according to the Bank of Korea.

The May number slowed from a 3.9 percent on-year gain tallied in April and marked the slowest growth since a 3.1 percent expansion in April 2004.

The M2 covers currency in circulation and all types of deposits with a maturity of less than two years at lenders and non-banking financial institutions, excluding those at insurers and brokerage houses.

“In May, liquidity provided by the government declined mainly due to a rise in tax revenues and foreigners pulling out their stock funds,” said Kim Byoung-soo, an economist at the BOK.

Korea’s current account surplus widened to $2.26 billion in May on sustained exports, but the account of portfolio investment posted a net outflow of $1.14 billion.

The on-year growth in the M2 has been slowing since July of last year when the money supply expanded 9.3 percent from the previous year, as banks have been wary of extending loans despite ample liquidity driven by low interest rates. 

(Yonhap News)