currencies. other measures taken include capital injections into financial institutions, expansion of deposit insurance and purchase of distressed assets. on fiscal policy, many countries have announced and are already implementing sizeable stimulus packages. evidently, there is no “ one - size - fits - all ” policy mix. some countries have more fiscal and monetary space than others. this brings me to the next – and to most of us here – the central question – how will the philippine economy fare amid this highly challenging global economic turmoil? admittedly, we are not immune to what is happening around the world, but there are insulations, cushions, buffers that can serve the philippine economy in good stead in this challenging period. let me provide some details on these buffers. output growth has continued at a respectable pace and it continues to be demand - driven. the 4. 6 percent gdp growth for 2008 was a respectable growth performance vis - a - vis those of our asian neighbors. it is noteworthy that the country ’ s gdp growth for 2008 is within the country ’ s long - term growth trend. domestic demand continues to be the main driver of growth in the economy, specifically personal consumption. demographics – particularly in the form of the philippines ’ young and economically active population – underpins the view that consumption will continue to propel economic growth even in these difficult times. moreover, income levels are such that majority of the population has a greater propensity to consume. weakening global demand is causing commodity prices to retreat. reflecting the global economic downturn, oil prices began to ease starting july 2008. partly because of this, headline inflation dropped sharply lower in december 2008 to 8. 0 percent year - on - year. this brought the average inflation in 2008 to 9. 3 percent. lower fuel prices and slower price increases of food and light, as well as of transportation and communication services accounted for the retreat of inflation. with the easing in the prices of oil and other non - oil commodities in the world market and given moderating inflation expectations, inflation in the philippines is expected to further decelerate – and be within the target range – in 2009 ( 2. 5 - 4. 5 % ) and 2010 ( 3. 5 - 5. 5 % ). this gives some flexibility to monetary policy to support growth and stabilize financial conditions, while being highly attentive to price pressures. fiscal reforms, particularly the vat reform, have strengthened the philippines ’ ability to cope with externally - induced challenges, as fiscal

that we should move towards that direction. instead, what i believe should occur is a move towards greater accountability. thus, the bsp will sustain its reforms that would lead to improved disclosure practices, better risk management and higher standards of governance in the banking system. we will continue to pursue regulation that would make the markets work more efficiently and advance consumer protection. realizing that the current crisis has taken on a global nature, we will further strengthen engagements with our regional peers to share information, discuss emerging developments, and pool resources, if necessary even foreign exchange reserves. it ’ s interesting that the current financial turmoil took on a turn for the better once the major economies began to act in concert. confidence had been quickly eroding until then. the coordinated and cooperative policies that were put in place by the us and european central banks and finance ministries beginning october last year, have helped restore some traction in the markets and subsequently improved market confidence not only in the major economies, but also in emerging markets. ladies and gentlemen, 2009 will be a critical year for our economy. but we should look at this crisis as like the gift of fire of old. fire is important in all facets of our lives including the need for light, power and heat. yet fire is not without risks to life and property. what is important is to be able to master it and harness it to serve human needs. thus, this crisis should pose a challenge to us to put together and implement policies this year and beyond that would enhance the resilience and the flexibility of our economy. without a doubt, this crisis shall test our resiliency and character, and it shall determine whether our buffers would keep us afloat amidst troubled waters. the philippines is not a newbie in terms of facing crises, for we have hurdled quite a number of these in the past. each crisis we encountered was unique in its roots and causes. but we have learned from each, every time. it ’ s too early to make prescriptions and judgments, given that much is still to unfold. i trust that the audience could share my vision in seeing a glass half - filled with water as “ half - full ” rather than “ half - empty ”. let us also remain vigilant and prepared for any circumstances that could come our way. let me end my remarks this morning with a quote from john d. rockefeller. he said " these are days when many are discouraged. in the years of my life, depressions have