our use of policy tools is targeted. for structural flows ( such as strong remittances and other current account receipts ), we allow for some currency appreciation. it would be imprudent to go against a trend supported by fundamental flows. but for the speculative kind, we impose market - based regulations aimed at providing the incentive structure for market participants to correctly price their transactions, taking into account associated risks. second, we use tools to address systemic risks. as we showed through earlier graphs on the movements in the peso, pse and gs, capital flows have not only impacted the exchange rate. they also affected the other financial markets and economic prices. during this crisis, we learned that monetary policy tools are not enough to contain the broad - based impact of capital flows. during this crisis, we learned that there is a need to complement monetary policy with macroprudential policy tools. the bsp has never targeted an exchange rate level nor mandated specific price levels for specific market transactions. instead, our policy has been to craft regulations that would help ensure that market participants appreciate the inherent risks of the transactions they enter into. in the case of capital flows, the market must be aware that flows which come in quickly into the economy, could also just as quickly flow out. this is often referred to as sudden stop or capital flow reversal. so far, this policy has resulted in containing the volatility in exchange rate movements to within the middle of the range of other regional currencies, although the peso has performed relatively more strongly than in previous years. in an environment where the movement of the exchange rate determines the financial wealth of different economic sectors and affects different sectors differently, this policy has been determined as fair. beyond capital flow management policies, the economy has been successful against shocks from external volatilities because of past reforms that have built stronger institutions. what are some of these? bis central bankers ’ speeches first, a disciplined monetary policy framework, with a clear focus on our mandate. second, sound and stable banking system, as reflected in well - capitalized and better - governed banks. third, a robust external position and payment dynamics characterized by continued build - up in foreign exchange reserves and a lower external debt - to - gdp ratio. the ng is targeting a gdp growth of 6 – 7 % in 2013 while for inflation, its 2013 target range is 3 – 5 %. clearly, the philippines performed quite well in 2012. while 2012 was a year of transition for the

see table 1 in the appendix ). while this lowered the returns to australian commodity exporters ( and australian exporters more broadly ), it allowed real income gains to flow to the rest of the economy via the associated decline in the prices of imports. the resource sector here and abroad responded to the commodity price boom by expanding productive capacity. this occurred gradually, reflecting both the unforeseen magnitude of the boom, its unexpected persistence, and the time required to plan for, approve and then complete large resource projects. in mid 2012, investment in the australian resource sector had peaked at just under 8 per cent of gdp, compared with its average of around 2 per cent prior to the boom. in the lead - up to that investment peak, growth in output, employment and wages in the resource sector ( broadly defined to include those industries servicing it ) was relatively strong. the boom in those industries led to strong economic conditions in the resource - rich states of western australia and queensland. the significant appreciation of the exchange rate provided a signal for labour and capital to be redistributed from the ‘ other tradable ’ sector towards the resource sector. as a result, the growth in investment, output, employment and wages was weak in the ‘ other tradable ’ sector. the large nominal exchange rate appreciation also helped to contain inflationary pressures in an environment of strong growth in domestic demand and a decline in the unemployment rate to relatively low levels. notwithstanding that assistance, overall inflation picked up to be a little above 2 / 16 bis central banker's speeches its inflation - targeting average. 4 non - tradable inflation was elevated during the boom years and growth in nominal unit labour costs was relatively strong for most of this period. in response to these inflationary pressures, the reserve bank raised the cash rate to be above its ( inflationtargeting ) average. after the boom – what we had thought might happen in our previous analysis, we noted that during the commodity price boom the economy had behaved, in many respects, as theory suggested. we also discussed how the economy might adjust as the terms of trade declined. it was clear that mining investment would fall, but at the same time, resource exports would increase as additional productive capacity came on line. however, overall demand for labour in the mining sector ( and in mining - related activity ) would decline because the investment phase in that sector is relatively more labour intensive than the production phase. 5 with the global supply of commodities catching up to global