economy – may not regain momentum soon. therefore, i am carefully monitoring these developments. b. domestic demand economic recovery this time has been led by the nonmanufacturing sector so far, mainly driven by private consumption. in order to have continued firm domestic demand, it is important to maintain a situation in which improvement in the employment and income situation supports consumption. another important factor in considering the future of domestic demand is the increase in firms ’ business fixed investment. turning to indexes related to consumption, private consumption remains resilient, but there is a sign of slowing in its growth momentum. the household activity - related diffusion indexes ( dis ) for current and future economic conditions in the economy watchers survey, which seem to reflect consumer confidence, dropped for the fifth consecutive month since april 2013. this development is consistent with that of real consumption expenditure in the family income and expenditure survey. the sign of slowing in consumption is also reflected to the latest gdp statistics. the real gdp growth rate in the july – september quarter of 2013 registered 0. 5 percent on a quarter - on - quarter basis. on an annualized quarter - on - quarter basis, it slowed to 1. 9 percent from around 4. 0 percent in the first half of the year. private consumption also slowed compared to the first half of the year, to 0. 1 percent on a quarteron - quarter basis. business fixed investment on the whole grew for the third consecutive quarter, reflecting an improvement in corporate profits, to 0. 2 percent on a quarter - on - quarter basis, but the recovery in the manufacturing sector still shows a lackluster performance. meanwhile, exports – which largely affect investment by manufacturing firms – lack resilience and decreased for the first time in three quarters, to minus 0. 6 percent on a quarter - onquarter basis. i think the key to the future of domestic demand lies particularly in the extent to which business fixed investment will grow under these circumstances, but that a full - fledged recovery of such investment will take time. c. outlook for prices as for the outlook for prices, i formulated a proposal to make the following changes in the october 2013 outlook report, although it was defeated by a majority vote during the bis central bankers ’ speeches monetary policy meeting ( mpm ). first, with regard to the outlook for prices toward the latter half of the projection period, i proposed to change the current expression that the year - onyear rate of change in the cpi “ is

in the public sector rose by 2 % to over 17, 000 employees. there was also a pickup in both the locally based work force and seasonal workers in australia and new zealand. consumer price pressures rose in 2018. headline inflation reached 4. 2 percent in december against 1. 8 percent at the end of 2017. this rate was within the bank ’ s forecasted range and was driven by stronger supply - side domestic inflation, along with the rise in imported prices. categories responsible for the spike in consumer prices during the year were education, transportation, food, and alcohol and tobacco. external conditions remained firm during the year. despite a reduction in the trade surplus, improved investment income and tourism receipts narrowed the current account deficit. as a result, the country ’ s gross foreign reserves increased by 10 percent to $ 5 billion. this level of reserves was sufficient to cover nearly 13 months of imports and is well above the cbsi ’ s precautionary import cover threshold of 6 months. developments in the monetary sector also point to sustained growth. broad money rose by 7 percent to $ 5. 2 billion due to increases in both net foreign assets and private sector credit. lending by banks to the private sector grew by 4 percent to $ 2. 4 billion during the year. major borrowing industries were construction, distribution, transportation and manufacturing. nonetheless, interest rate margins remained high at around 10. 5 percent. meanwhile liquidity levels in the banking system continued to accumulate, rising by 14 percent to $ 2. 2 billion and was largely driven by the growth in net exports. excess liquidity remained high, although we believe it is not inflationary, particularly in view of the much lower credit growth and the supply - side nature of inflation in the country. with respect to government ’ s finances, 2018 was a positive year. the fiscal position returned to an estimated surplus of $ 191 million after two successive years of deficits, reflecting considerable fiscal consolidation. revenue in particular rose on strong collection from tax and trade - related duties, while total expenditure only grew marginally, amidst a reduction in development spending. meanwhile, government debt increased moderately and remained at around 11 percent of gdp. turning to the outlook for the economy, cbsi projects the solomon islands economy to grow by 3. 7 percent in 2019. this moderation in growth reflects the key assumption that forestry will finally decelerate as part of the government ’ s new policy to achieve sustainability in the forestry sector. nevertheless, growth is expected to be driven by