We pay particular attention to what is happening in the equity and property markets, as these markets are interest-rate sensitive and could be prone to bubbly behavior. We see that while activity in these markets has been buoyant, the key indicators are growing broadly within trend, reflecting both cyclical as well as structural or fundamental forces.
It is also important to note that indebtedness in the Philippines is still quite low. Domestic creditto-GDP ratio at 50.4 percent (Q4 2012) still ranks one of the lowest in the region.4 This would suggest that the risk of excessive leverage is less and the threat to financial stability is likewise lower, should asset prices correct.