, pushing public debt ratios higher. and while economies continue to grow in real terms, the experience of the past few years – in particular, their abrupt slowdown in 2015 – highlights the region ’ s vulnerability to external developments, such as swings in resource prices or a rebalancing of china ’ s growth path towards less commodity - intensive demand. finally, while inflation in the first half of 2018 was reasonably benign in the majority of african countries, the sensitivity of consumer price trends to prices of oil and food commodities, and to exchange rate swings – because of the high share of consumer goods that are imported – is a strong reminder that such stability cannot be taken for granted. what will happen next? how will the emerging market situation evolve over the next few months and quarters? in the past couple of weeks, pressure on emerging currencies and other assets has abated to some extent, helped by signals from several central banks indicating that they would not tolerate durable upward shifts in inflation. however, it is too early to predict a stabilisation in emerging market assets, and too early to say with confidence whether the recent market correction will, or will not, turn into a more severe adjustment that could severely undermine growth prospects, and possibly strain corporate and bank finances in emerging countries. at present, many economists are of the opinion that emerging market assets, and especially currencies, are more fairly valued than they were at the start of the year. however, historical experience tells us that ‘ overshoots ’ can often happen, following adjustments similar to what has just been witnessed, and financial assets can face an extended period of volatility before settling around new ‘ equilibrium ’ values. there are, however, some encouraging factors which should limit the risk of a further, severe adjustment. first, as i indicated earlier, growth in advanced economies has remained relatively resilient, much as risks seem tilted to the downside. even in emerging markets, with the exception of argentina, turkey and south africa, growth forecasts have not significantly changed since early 2018 ; hence, the risk that financial market stress in emerging countries could negatively ‘ spill back ’ into the advanced economy growth outlook still appears, for now, to be low. importantly, too, much as the risk remains, we are not witnessing the kind of inflation pressures that might force the world ’ s major central banks into a significantly faster pace of policy tightening – potentially derailing economic expansion. while both headline and core inflation are at present higher in

structural reforms. our banks have limited exposure to structured credit and related derivative products which were the main cause of the large losses of crisis - affected international institutions. liquidity in our banking system remains adequate and bank lending operations continue to expand at a healthy pace. furthermore, our banks are capitalized above the global standards and bsp regulatory requirement. moving forward the next question is how do we move forward? first, given the buffers i have mentioned earlier, we should face the global headwinds with an underlying belief in the resilience of the philippine economy. the message is that 2008 has been a tough year and 2009 will most likely be tougher – but our economy is in a better shape to weather this global storm. this is not our first crisis, nor will it be the last. this time around, we are entering the crisis from a position of relative economic strength. the key is to manage the factors that are within our control, to maintain a positive mindset, and to capitalize on our time - tested resiliency and ability to innovate amidst challenging times. this brings me to my second point. we should press on with the strategy that has so far kept us in good stead – macroeconomic prudence. sound macroeconomic fundamentals are the first line of defense during these trying times. our experience in the past years has demonstrated that sound monetary, fiscal and structural policies have a salutary effect on the economy. the key challenge is to continue to have a consistent and coordinated monetary, financial and fiscal policy response to the ongoing crisis. the commitment to tackle policy challenges boldly through purposeful reforms to strengthen institutional underpinnings, improve productivity and boost international competitiveness should ensure a steady anchor to the country ’ s economic prospects amidst the inevitable global storms. on the part of the bsp, we will continue to craft monetary and financial policies that will support broad - based economic growth while keeping prices stable. in other words, the bsp ’ s monetary policy will continue to focus on achieving price stability while allowing room for the economy to grow. the bsp will also continue to stabilize financial conditions through reforms that will foster healthy financial balance sheets. we will guard against systemic failures through liquidity provision when necessary, while keeping inflation under control. this will ensure the effective functioning of transmission channels for monetary policy. in turn, this should reinforce confidence in the financial markets and in the economy as a whole. the ultimate goal is to have a more balanced and