forecasts for 2013. all these favorable assessments and bright growth prospects were driven by the solid performance of the philippine economy across various indicators. let me cite four : robust and broad - based economic growth. the stronger - than - expected growth performance in 2012 was supported by broadening growth drivers. all major economic sectors advanced during the year. bis central bankers ’ speeches on the supply side, transportation, telecommunication, real estate, and construction business activities pushed the economy forward. meanwhile, on the demand side, growth was boosted by consumer expenditure and government spending. favorable inflation environment and well - anchored inflation expectations. i should point out that the increased activity has not caused the general price level to rise. inflation has generally remained low, and prospects appear to be equally subdued in terms of price. indeed, we expect this scenario of high growth - low inflation to be sustained going forward. sound and stable banking system. the strong economic performance is itself anchored on a sound and stable banking system. deposits continue to build up, allowing loans to similarly expand. much like inflation, our banks ’ capital adequacy ratio shows no sign of vulnerability. this encouraging situation supports our assessment that our banks are ready for the implementation of basel 3. we will roll out the capital adequacy framework of basel 3 in about nine months from today. robust external payments position. a robust external position completes our position of strength. whether we look at the overall bop position or its sub components, we see positive balances. remittances from ofs continue to bolster domestic liquidity while bpo estimated receipts continue to be a positive factor. all these eventually led us to a gir level that is just below us $ 84b. 2013 macroeconomic outlook the macro financial numbers provide us some momentum. nothing in the first quarter gives us reason to take pause. instead, the outlook continues to be encouraging. given available data, we expect growth to further accelerate but this time aside from the growth drivers in 2012, we anticipate a more pronounced contribution from the external trade sector. in addition, remittances from our ofs will continue to be a steadying factor. the bop is also seen to remain in surplus, which in turn will support an even higher level of international reserves. at end 2013, the gir is projected to reach $ 86. 0b. challenges to the economic outlook but while we expect the philippine economy to continue to show resilience, given its solid macroeconomic fundamentals

development of a strong industrial base in the country. with a well - represented industry sector, ffcccii could easily push for a roadmap toward a stronger and more diversified industry sector across various lines and regions nationwide. this project could certainly lend support to one of the government ’ s key concerns : employment generation in the domestic economy. 4. investment in human capital. i know that the ffcccii has been keen on pursuing programs and projects aimed at promoting education. these include construction of barrio schools and provision of scholarship programs to elementary and high school students in chinese - filipino schools. i encourage you to expand existing programs in this area. bis central bankers ’ speeches these are only a few of what i have in mind, but i am sure that the ffcccii could contribute a lot more in terms of programs and projects geared toward nation - building, on top of what the federation has already been doing in the past. bsp ’ s policy directions going forward ladies and gentlemen. we are seeing many positive developments but the agenda is definitely not done yet. we need to take a holistic view and pursue the prudential path towards financial stability. i realize that to many of you, financial stability may sound to be such a high - level objective that is detached from the ground. in reality, this prudential objective has a direct bearing on all of us. financial stability means that we will continue to set monetary policy with an inflation anchor that is consistent with the needs of the broader macroeconomy. in particular, the bsp sees interest rates remaining low over the policy horizon, given a manageable inflation outlook. foreign exchange inflows are expected to continue, although we see flows coming in at a slower pace than before. therefore we expect the peso to remain well - supported. financial stability also means a stable and sound banking sector that actively promotes inclusion, provides for non - traditional delivery channels of financial services, and protects the interests of the saving public. in particular, the bsp will continue with the banking reform agenda, including the adoption of basel 3 capital adequacy standards in january 2014. finally, financial stability must then mean that we have an efficient payments system that is responsive to the business needs of the community as well as in providing the needed market infrastructure for investors. conclusion ladies and gentlemen, the 2012 macroeconomic performance of the philippine economy has set a significant standard for the country. while challenges remain and continue to pose risks to the economy