benjamin e diokno : one team, one goal - resilient partnership towards inclusive economic growth speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the 2019 awards ceremony and appreciation dinner for bsp stakeholders in region iii, subic, zambales, 13 september 2019. * * * good afternoon, everyone. it is with great pleasure that i welcome all of you to the 2019 awards ceremony and appreciation dinner for bsp stakeholders in region iii. i am pleased that the bsp has been recognizing the invaluable contributions of its partners in central banking for the past 16 years now. the growth in the number and scope of awards given reflects the dynamic support and cooperation you have extended to the bsp ’ s various initiatives and advocacies, which are all geared toward improving the life of every filipino. i cannot overemphasize the value of your support as the bsp continues to navigate the country ’ s economic landscape. by working as one team, we have entered this year from a position of strength and with renewed optimism. based on the country ’ s economic performance, the gross domestic product ( gdp ) grew by 6. 2 percent year - on - year in 2018 and remained firm at 5. 5 percent in the first semester of 2019. on the production side, economic growth was propelled mainly by the robust performance of the services sectors. broad - based expansion in household consumption and government spending reinforced growth on the demand side. meanwhile, january to august 2019 inflation readings have averaged 3. 0 percent, well within the announced target range of 2 to 4 percent of the national government. last august, inflation slowed down to 1. 7 percent. the external position of the philippines is reflective of an economy driven by solid macroeconomic fundamentals and firm growth prospects. the country ’ s balance of payments ( bop ) position for the first seven months of the year posted a surplus of us $ 5 billion, a turnaround from the us $ 3. 7 billion bop deficit recorded in the same period last year. the surplus may be attributed partly to remittance inflows from overseas filipinos during the first six months of the year, and net inflows of foreign direct investments during the first five months of the year. sustained inflows of foreign exchange are expected to continue to support the peso. in the first six months of the year, net

loans granted to these clients are commonly known as “ sub - prime mortgage loans ”. in some instances the sub - prime loans were offered at initial low “ teaser ” rates, which reset to higher rates after a few years. as these loans began to reset and the housing market began to cool off during 2006 ( i. e., growth in house prices decreased ), these clients found themselves unable to meet the higher payment obligations and were not able to refinance their loans. it was during this period that non - performing sub - prime mortgage loans increased rapidly. ” “ concurrent with the granting of sub - prime mortgage loans, certain institutions securitised their mortgage loans. numerous methods and instruments were developed to facilitate this process, and the instruments became increasingly complex. instruments such as mortgage - backed securities and collaterised debt obligations offered tranches of risk, ranging from high - risk equity tranches to low - risk senior tranches. as a result, a wide range of banks and investors faced significant exposure, directly and indirectly, to the us sub - prime mortgage market. ” ( p. 3 ) at the time of writing, the impact of the us sub - prime crisis on the prospects for the international economy are difficult to assess : not least because of the rate at which the losses which have been incurred by major financial institutions are being reported. however, from media reports, it would appear that bloomberg ’ s calculations of write downs by and credit losses of banks related to the sub - prime crisis, at approximately us $ 400 billion, provide a plausible threshold. these estimates are reproduced in table 2, below. what is clear is that prolonged financial - market turmoil in the major industrialised economies of the world would impact adversely on economic and financial stability generally, making prospects for a resumption of robust and sustained economic growth in south africa more uncertain. so too with an attenuation of the processes currently underway to reduce the imbalances which are extant in the global economy through unchanged or increased protectionism, reluctance to permit currencies to appreciate ( or depreciate ) in accordance with economic fundamentals. in short, prospects for the international economy are served poorly by a generalised failure by policy makers to acknowledge, by praxis, a simple fact : namely, that a globalising economy is, was and will remain a closed system. its imbalances cannot, as yet, be exported ( or transported ) elsewhere. see, for example : bern