fiscal 1997. against the background of the steady overseas demand and the yen ’ s depreciation to date, real exports stayed firm in july after having increased significantly in the second quarter reflecting some additional temporary factors. real imports had been stagnant since april, but rose in july reflecting the rise in imports of foodstuffs and airplanes, in addition to the increasing trend of information - related goods. as a result, the real trade surplus stopped rising in july after the significant increase in the second quarter. the nominal current - account surplus showed a large expansion in the second quarter 1997, partly reflecting the decline in crude oil prices since early 1997. industrial production in the second quarter has been firm and remained virtually unchanged after recording high growth during the second half of 1996 and the first quarter 1997. despite the decline in demand following the surge ahead of the consumption tax hike, factors such as the substantial increase in exports and the rebuilding of inventories have supported production. production is expected to increase slightly in july and august compared to the second quarter. meanwhile, inventories are at appropriate levels on the whole, despite some accumulation in industries such as in automobiles. labor market conditions have continued to improve on the whole. although the unemployment rate remains at a high level, the growth in nominal wages has been increasing and the year - to - year employment growth has started to gather pace, albeit gradually, reflecting the increase in production and corporate profits. prices remained stable on the whole, excluding the effect of the consumption tax hike. although downward pressures remain, including that from the decline in import prices, as well as that from technological innovation in electrical machinery, domestic wholesale prices ( adjusted for seasonal electricity rates ) have remained virtually unchanged. this reflects the moderate improvement in overall domestic supply and demand conditions. the year - to - year declines in corporate service prices are narrowing steadily on the whole, partly owing to the improvement in supply and demand conditions, particularly for real estate rents and information services, although leasing charges continue to decline. consumer prices ( nationwide, excluding perishables ) overall are marginally above the previous year ’ s level mainly because the year - toyear declines in goods prices have narrowed. the growth in monetary aggregates, measured in terms of the year - to - year growth of m2 + cds average outstanding, has been growing at around 3 per cent. regarding money market rates, the overnight call rate ( uncollateralized ) has moved at a level slightly below the official discount rate. the 3 - month

happy therefore that when we tracked the correlation between the results of our expectation surveys with actual data on the gdp, inflation, interest rates and foreign exchange we found high overall convergence. ladies and gentlemen, we continue to achieve high correlation because you provide us accurate, comprehensive and timely survey inputs. thank you! as a result, the bangko sentral ’ s policy decisions continue to provide the stability that preserves the public ’ s purchasing power and creates a planning environment conducive to strong and sustainable growth. with bsp ’ s policy rates now at record low levels, average interest rates charged by banks to their customers have also dropped to single digit levels. this has benefitted consumers in terms of access to more affordable credit while business is able to expand and create new jobs with lower financing costs. bis central bankers ’ speeches moving forward, therefore, the bangko sentral will continue to focus on fighting inflation and safeguarding price stability to achieve sustained and inclusive growth. the bangko sentral also needs your support for other surveys including cross border transactions, coordinated portfolio investment, information technology - bpo outsourcing services, and foreign direct investment. among others, these surveys help us determine our balance of payments position, a closelywatched indicator of our transactions with the rest of the world. we are pleased to report that our external accounts remain robust, providing much - needed insulation from external shocks. external payment dynamics remain strong on the back of rising foreign exchange reserves, sustained influx of overseas filipino remittances and bpo receipts, and declining external debt to gdp ratio. i am also happy to note that our network of committed partners continues to expand. from seven in 2004, we now have 71 awardees, 42 of whom are in areas outside the national capital region. ladies and gentlemen. as we take stock of our achievements, we also take note that the resiliency of our economy strongly reflects the efficient performance of our information sharing initiatives. indeed, our partnership continues to generate synergies that lead to transformational growth. and while recent developments in the external front have made economic conditions more challenging, we have been able to ride out these headwinds to economic growth. we attribute these largely to the strength of our partnerships and to the buffers that the philippine economy has built through the years. another source of strength of the philippine economy is our sound and stable banking system. deposits continue to increase to record levels, in tandem with healthy growth in lending. and the quality of loans continues