with the incidence of poor population declining from 49. 5 percent in 1988 to 21. 6 percent in 2015. the new philippine development plan aims for this to fall further to 14. 0 percent by 2022. also, income inequality has been reduced. the gini coefficient inched down from 0. 49 in 1997 to 0. 44 in 2015. finally, inflation for the lowest 30 percent of households is also lower now than in prior years. from 5. 1 percent in 2009, it has fallen to only 1. 4 percent as of end - 2016, suggesting that these households are now less vulnerable to price shocks. policy thrusts all these support the belief that with the right policies and programs in place, it is possible to achieve sustainable and inclusive growth. but for the engine of inclusive growth to keep running, both the public and private sectors must share in the responsibility of making sure that no filipino 4 / 7 bis central bankers'speeches is left behind. there is much to be done towards this end, so i reiterate the question i posed at the beginning : how do we create a more inclusive society? in this regard, let me provide some highlights of the initiatives for public policy. on the part of the bsp, we reaffirm our commitment to maintain price and financial stability conducive to balanced and sustainable growth. our latest projections indicate that inflation is likely to settle within the target range of 2 - 4 percent for 2017 – 2018 — at the moment, our forecasts are at 3. 4 percent for 2017, and 3. 0 percent for 2018. inflation expectations also remain well - anchored. therefore, the current stance of policy is deemed appropriate. the balance of risks surrounding our inflation outlook is, however, tilted toward the upside. the transitory impact of the proposed tax reform program as well as possible adjustments in transportation fares and electricity rates could raise the inflation trajectory. however, uncertainty over the prospects of the global economy and potential macroeconomic policy shifts overseas continue to pose a key downside risk. turning to financial stability, the bsp will remain steadfast in working to strengthen the banking system, improve risk management standards, and align our financial regulations with international best practices. amid turbulence in the global economy, maintaining a market - determined exchange rate will help ensure the stability of the philippine financial system and the economy as a whole. we are an inflation targeter, and therefore do not target specific exchange rates. that is why the bsp participates in the fx market only

broader base for growth, a manageable inflation environment, a sound banking system, and a healthy external payments profile. how can these buffers sustain the philippine growth engine, and how sustainable is the philippine growth story? over the last two decades, the country has weathered just as many financial crises — the asian financial crisis in the late 90s, and the global financial crisis in the late 2000s. throughout this period, the country managed to register 72 consecutive quarters of output expansion. to put things into perspective, we are referring to a span of 18 years. barring any significant shock, we are on track to extending this streak, as recent indicators of activity point to a strong growth impulse. 3 the national government expects growth to average 6. 5 - 7. 5 percent this year, higher than last year ’ s target of 6 - 7 percent. this mirrors buoyant business sentiment, as indicated in our latest business expectations survey. the optimistic outlook is anchored on expectations of stronger job orders, the potential expansion of businesses and product lines, as well as the ongoing infrastructure projects of the government. one reason for this sustained growth impulse is that growth has become more broad - based. on the demand side, growth has historically been anchored by robust household consumption. in recent years, investments have also become a significant growth driver. in 2016, for instance, the contribution of capital investments to overall gdp growth even outstripped that of private consumption. meanwhile, on the supply side, the shares of manufacturing and construction have also been increasing. this complements the steady contribution from services such as trade, real estate, and financial intermediation. in short, the country now has more diversified domestic sources of growth. they should also serve as ample cushions against external shocks, particularly if protectionist sentiment continues to gain traction overseas and dampen the country ’ s export - oriented sectors. it also bears noting that this sustained growth in output was achieved under a stable inflation environment. going forward, we see average inflation will be within the target range of 2 - 4 percent for 2017 – 2018. a closer scrutiny of the monthly inflation path will show that inflation imprints will be rising until sometime in q3 2017, when the monthly rates are expected to be very close to the upper band of the target range. even so, our forecast path suggests that monthly inflation will slow down thereafter, resulting in within - target full - year averages over the policy horizon or the next two years. 3 / 7 bis central bankers'speeches in