unemployment remains low and is declining … inflation expectations continue to be firmly anchored, with the forecast close to lower end of target range of 3 – 5 %, so interest rates can be seen to be stable … bop is seen to post a surplus of $ 2. 6 billion. foreign reserves are projected to continue to rise to about $ 77. 5 – 78 billion in 2012 while debt service is expected to remain stable, or even decline … with these, the peso can be expected to trade within reasonable ranges. … banks are seen to remain in good health. ladies and gentlemen, if you are to build opportunities and ride on the wave of our current position of strength, you need to recognize that the choices you make today will have lasting consequences …. this was what your policy makers did in 1997. we took on the difficult reforms to correct structural vulnerabilities then. thus we developed the defenses that ensured resilience through the crisis of today. it hasn ’ t been easy getting to where we are today. so your role in this uneven operating environment is to safeguard the gains so far, for it is these hard - earned gains that will allow you to take advantage of the opportunities going forward. in support, you can be assured that the bsp will craft the requisite enabling monetary, external and banking sector policies. there is no magic formula that will allow us to accomplish all these effortlessly. the key, however, remains to think of the bigger picture – no longer just in terms of individual pay - offs but rather on how our respective actions can produce the shared goal of a strong, steady and upward economic growth trajectory that benefits the greater majority. bis central bankers ’ speeches

the country ’ s sources of resilience that have allowed us to sustain positive growth and make notable headway towards greater inclusion. finally, i ’ ll relate these developments to emerging challenges for policy and the role the private sector can play in promoting inclusive growth. 1 / 7 bis central bankers'speeches global outlook and risks in terms of the world economic outlook, global growth is projected to improve modestly over the next two years, with upward adjustments to the projections of the imf for the us, eu, uk and japan for 2017. note, however, that these forecasts are still lower than the actual growth outcomes prior to the global financial crisis. 2 meantime, the outlook for emerging markets is still mixed. in particular, economic activity in china has held firm, while growth projections for india and brazil in 2017 were cut. a downside risk to this outlook, however, is potential political discord and heightened inward - oriented sentiment, both of which could undermine global trade and dampen financial market sentiment. meanwhile, an offshoot of the evolving upward momentum in global growth is the possibility of reflation, or that global inflation may be at a turning point. this positive momentum is reflected in the shift in policy stances of a number of central banks. as you all know, the us fed raised its target fed funds rate by 25 bps last week. furthermore, it is widely expected to continue on this path, with at least two more hikes anticipated in 2017. a review of recent monetary policy decisions suggests that central banks have largely turned neutral — they see less urgency for further accommodation and would rather stay on hold. this phenomenon has been described as “ watchful pause ”. the prospect of higher interest rates in advanced economies could cause capital outflows from emerging market economies ( emes ) as investors search for yield. the retreat of funds away from emes could lead to tighter dollar funding conditions in emerging markets. for firms with significant dollar - denominated liabilities, these developments could pose a risk to their balance sheets and profitability, unless of course these exposures have been adequately hedged. in the case of the philippines, we have seen some incipient signs of capital flow reversals as early as last year. fortunately, the risk to businesses was mitigated by robust domestic liquidity and credit growth and by an adequate supply of foreign exchange. debts of nonfinancial corporations in the philippines also remain mostly peso - denominated, which provides some