##y of these gains had emerged only in the later years of the expansion. the labor force participation rate, for example, had been steadily declining from 2008 to 2015 even as the recovery from the global financial crisis unfolded. in fact, in 2015, primeage labor force participation — which i focus on because it is not significantly affected by the aging of the population — reached its lowest level in 30 years even as the unemployment rate declined to a relatively low 5 percent. also concerning was that much of the decline in participation up to that point had been concentrated in the population without a college degree ( figure 2 ). at the time, many forecasters worried that globalization and technological change might have permanently reduced job opportunities for these individuals, and that, as a result, there might be limited scope for participation to recover. fortunately, the participation rate after 2015 consistently outperformed expectations, and by the beginning of 2020, the prime - age participation rate had fully reversed its decline from the 2008 - to - 2015 period. moreover, gains in participation were concentrated among people without a college degree. given that u. s. labor force participation has lagged relative to other advanced economy nations, this progress was especially welcome ( figure 3 ). 3 as i mentioned, we also saw faster wage growth for low earners once the labor market had strengthened sufficiently. nearly six years into the recovery, wage growth for the lowest earning quartile had been persistently modest and well below the pace enjoyed by other workers. at the tipping point of 2015, however, as the labor market for data comparing labor force participation rates across countries, see organisation for economic cooperation and development ( 2021 ), “ labour force participation rate ” ( indicator ), oecd data, https : / / doi. org / 10. 1787 / 8a801325 - en. - 3continued to strengthen, the trend reversed, with wage growth for the lowest quartile consistently and significantly exceeding that of other workers ( figure 4 ). at the end of 2015, the black unemployment rate was still quite elevated, at 9 percent, despite the relatively low overall unemployment rate. but that disparity too began to shrink ; as the expansion continued beyond 2015, black unemployment reached a historic low of 5. 2 percent, and the gap between black and white unemployment rates was the narrowest since 1972, when data on unemployment by race started to be collected. black unemployment has tended to rise more than overall unemployment in recessions but also

extent the stronger peso. headline inflation has fallen to 7. 0 percent in the second half of 2005. the average inflation rate for last year was 7. 6 percent. more importantly, core inflation, which takes out the impact of volatile food and energy prices on the cpi, has steadily trended downwards. the decline in core inflation suggests that the inflationary pressures of the past year were not of a permanent, demand - driven nature. this fact supports the limited and selectively tightening bias of monetary policy. another source of optimism is the improving fiscal performance. coming from a very difficult period of large and persistent fiscal overhang, the government embarked on and succeeded in its initial efforts towards fiscal consolidation, by way of intensified tax administration and vital new tax measures as well as expenditure control. the national government budget deficit stood at p146. 5 billion for 2005, well below the target for the period. this figure also represents the lowest budget shortfall since 2001. as revenue gains continue with the vat implementation, we stand a good chance of seeing a balanced budget by 2008. the positive investor sentiment over the progress made on the fiscal front as well as healthy inflows from remittances have also strengthened the external position. latest estimates show that the overall balance of payments ( bop ) position for 2005 stood at a surplus of us $ 2. 4 billion, which is a welcome turnaround from the previous year ’ s shortfall. the peso likewise ended stronger against the us dollar on the back of the positive market sentiment and strong inflows. the peso ended 2005 as the top performing currency in the asian region. this surge in dollar inflows also allowed the bsp to build up its dollar reserves. at us $ 18. 5 billion as at end - december 2005, the country ’ s gross international reserves ( gir ) is significantly higher than the us $ 17 billion target for the year and is sufficient to cover about 4 months ’ worth of imports of goods and services. meanwhile, the country ’ s external debt also narrowed to us $ 55. 5 billion by end - september 2005. this amount continued to be made up mostly of medium - and long - term liabilities, which ensures that our debt payments remain manageable and sustainable. at the same time, the philippine banking system continued to show improving soundness. as of november 2005, commercial banks ’ non - performing loans as a percentage to total loans registered a single digit level of 8. 7 percent.