Academic literature on the topic 'Export premium'

The paper presents evidence of the relationship between exports and wage inequality using manufacturing firm-level data from Ghana. After contextualizing the Ghanaian manufacture sector a dynamic difference-indifferences model was used to compare exporting firms to matched non-exporting ones before and after the African Growth Opportunity Act (AGOA) was enacted. Robustness tests were used to verify if the estimated export premium is associated with AGOA. After estimating the heterogeneous change in wages associated with the export premium, the paper finds that exporting per se may not necessarily lead to wage inequality, but the mechanism by which export premium is transmitted to workers and this mechanism has primarily benefited unskilled male workers with relatively lower pre-AGOA wages working in smaller firms.

Premium price is an indicator of certification market effectiveness. But its existence depends on the eco-consumers in the markets. Ideally, certification is in line with benefits obtained from the market. This research aims to analyze whether the SVLK certification is capable to generate premium price of Indonesian mouldings exports and see if there is a different effect between EU and Non-EU export destinations. The analysis base on transactional exports data from 2006 to 2017 using the hedonic model approach. The regression results show that the price of SVLK certified products is 7% more expensive than non-certificate products. However, there is no significant influence of the export destination to EU or Non-EU to the prices.

Export credit guarantee or insurance covers non-payment risks in exports. Many countries have established export credit agencies (ECAs) to promote exports through export credits including export credit guarantee or insurance. Officially supported export credits have brought the concern that they may distort fair competition in international trades. Export credit guarantee or insurance programmes with inadequate premium rates are likely to fall under the prohibited subsidies. ECAs need to understand the requirements of the prohibited subsidies under the Agreement on Subsidies and Countervailing Measures (SCM Agreement). This article will discuss features and functions of export credit guarantee or insurance in international trades. This article will also discuss some issues concerning the elements of a subsidy and illustrated list of prohibited export subsidies with regard to export credit guarantee or insurance by analysing the relevant provisions of the SCM Agreement and WTO Panel or Appellate Body Reports. countervailing measure, export credit, export credit insurance, export credit guarantee, prohibited subsidy, the SCM Agreement, subsidy

Whereas the policy incentives were designed to promote exports from Pakistan, the incentive system instead led to illicit export practices, i.e., export overinvoicing due to the weaknesses of implementation. Such practices resulted in a significant financial loss to the country and undermined the effectiveness of the export-promoting policy. This paper has determined the presence of overinvoicing of exports in Pakistan and the geographic and product-wise patterns in export overinvoicing. The paper has applied the ‘partner-country data comparison’ technique. Empirical findings confirm the strong presence of export overinvoicing across trading partner countries and products. This conclusion is further supported by the evidence of a significant difference between the duty-drawback rate and the premium on foreign exchange in the kerb market. Convincing presence of export overinvoicing is the basis for a set of policy recommendations made in the paper.

The development of New Zealand's economy was based largely on exports to England. With the formation of the EEC, New Zealand was forced to find other markets and concentrate on a wider variety of export commodities. Marketing boards for specific products with monopoly power have been at the center of agricultural and horticultural exports in New Zealand. New Zealand has concentrated on developing new varieties, premium quality, research on postharvest handling, branding, and other marketing procedures to compete in the world market and give producers a good return.

Cretan olive oil is known for its premium quality worldwide. In the post pandemic international environment, the rising demand for olive oil due to its health benefits has generated greater competition amongst traditionally non-producer and producer countries. Olive oil exports affect both the financial growth and stability of companies that trade it and the economic prosperity of the Crete prefecture. Various factors can influence a company’s export performance, and of those it is widely agreed that the presence of an export manager yields a positive impact. The aim of this paper is to investigate the influence of an export manager on export marketing policies. The application of the Chi-Square Test (χ2) was judged as the most suitable criterion for the elaboration of the research. The χ2 test showed that there are statistically significant correlations between variables. The findings of the research indicate an exports manager’s influence on promotions abroad and in conducting market research before exporting to a new foreign market. The employment of an export manager and the level of his/her certified knowledge appear to have a positive impact on the export marketing policies of companies that export Cretan olive oil.

Abstract Oregon softwood log exports experienced a resurgence during years after the Great Recession. Using an empirically grounded partial equilibrium model, the purpose of this study is to assess the net effects of log exports on total economic surplus by measuring the effects of a hypothetical absence of export markets from 2010:Q1 to 2015:Q4. Based on our modeling results, the net economic losses would have amounted to $248 million during the study period in total. Oregon mills would have gained $1.66 billion in total, whereas landowners would have lost $1.91 billion in total had there not been export markets. Furthermore, additional losses would have occurred from the forgone export premium. Our modeling results suggest that harvests would have been 1.97 billion board feet lower in the absence of export markets. However, Oregon mills would have used an additional 3.0 billion board feet. We also provide estimates for potential employment effects.

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Management from the NOVA – School of Business and Economics
In spite of the success in the Portuguese market, its small dimension and its proximity to maturity, led Água das Pedras to internationalize its strategy and grow overseas. After the internationalization to Brazil, one considered China as a highly potential market for Pedras to succeed in, mainly due to its size and untapped demand. Hence, this report presents the competitive assessment of Pedras in the Portuguese market followed by a macro-environmental study of China as well as a detailed industry analysis. As the competitors’ analysis evidenced the potential of Pedras, an implementation plan is proposed through an Indirect Export Strategy.

We set up a trade model with heterogeneous firms and a worker population that is heterogeneous in two dimensions: workers are either skilled or unskilled, and within each skill category there is a continuum of abilities. Workers with high abilities, both skilled and unskilled, are matched to firms with high productivities, and this leads to wage differentials within each skill category across firms. Self-selection of the most productive firms into exporting generates an exporter wage premium, and our framework with skilled and unskilled workers allows us to decompose this premium into its skill-specific components. We employ linked employer-employee data from Germany to structurally estimate the parameters of the model. Using these parameter estimates, we compute an average exporter wage premium of 5 percent. The decomposition by skill turns out to be quantitatively highly relevant, with exporting firms paying no wage premium at all to their unskilled workers, while the premium for skilled workers is 12 percent.

Este trabalho buscou entender o prêmio de exportação da soja em grão no porto de Paranaguá, seu mecanismo de formação, padrão sazonal, as principais variáveis responsáveis pelas oscilações diárias e mensais, bem como determinar qual contrato futuro da bolsa de Chicago e prêmio (preços FOB) estão mais relacionados com os preços internos. Para tanto, foram levantadas através da literatura e entrevistas as variáveis potencialmente significativas para explicar as variações do prêmio de exportação da soja em grão. Adicionalmente foram calculadas séries de preços FOB, que foram posteriormente relacionadas com os preços da soja no mercado interno. Através de testes de causalidade foram definidas as principais variáveis explicativas do prêmio. Estas variáveis foram relacionadas ao prêmio através de regressões lineares, utilizando-se dados diários e mensais. O mesmo procedimento foi utilizado para definir a série de preço de exportação mais relacionada com o preço doméstico da soja. Para cada série foi realizado o teste de raiz unitária, objetivando-se verificar a estacionariedade das séries. As variáveis que apresentaram relação causal com o prêmio da soja em grão são: o prêmio do grão defasado, o prêmio do óleo, o prêmio do farelo e o percentual exportado através do porto de Paranaguá para a Europa e Ásia. Estas variáveis apresentaram-se positivamente relacionadas com o prêmio, isto é, uma elevação nas variáveis explicativas tende a elevar a variável dependente (prêmio do grão). Por outro lado, o preço interno do farelo, chuva no porto, estoques no Brasil, na Argentina e nos Estados Unidos são negativamente relacionados ao prêmio, isto é, a elevação dessas variáveis tende a reduzir o prêmio. Os fretes internacionais, tendo como proxy o preço internacional do petróleo, a taxa de câmbio e as cotações da bolsa de Chicago não apresentaram relação causal com o prêmio de exportação da soja em grão. Os resultados mostram também que a relação entre as séries de preços de exportação (FOB) e o preço interno da soja é unicausal, com sentido do preço de exportação para o preço interno. Os preços FOB referenciados nos contratos para o primeiro vencimento da bolsa de Chicago apresentaram a maior elasticidade de transmissão de preços, sendo estes os preços de exportação mais bem relacionados com o preço interno da soja.
This research analyzed the formation process of the Brazilian soybeans export premiums at Paranaguá port, Paraná, including its seasonal behavior and effects of the main related variables. This study determined which future contract in the Chicago Board of Trade and export premium (which results in the price received by exporters - Free on Board Price) is closest to domestic prices. The analysis was accomplished with daily data from 1996 to 2002 and monthly data from 1993 to 2002. Variables potentially relevant were raised through literature review and interviews with exporters, importers and brokers. The effects of these variables were submitted to causality tests, being related to export premiums through linear regression models, using daily and monthly data. The same procedure was used to determine the FOB price most related to internal ones. In order to verify whether the variables are stationary, the series were submitted to Unit Root Tests. The variables that presented causal relationship with the export premium are: soybeans premiums lags, soy-oil premiums, soy-meal premiums and the percentage of exports to Europe and Asia through Paranaguá Port. These variables are positively related to the soybeans premiums, that is, an increase in these independent variables led the premium to rise. Soy-meal domestic price, rain intensity in Paranaguá port, inventories in Brazil, Argentina and United States are all negatively related to the soybeans premiums. On the other hand, international petroleum prices (as a proxy to international freights), exchange rate and CBOT prices did not present causal relationships with soybeans premiums. Results show that export (FOB) prices cause domestics prices. FOB prices referred to first contracts at CBOT showed the largest elasticity of price transmission and, therefore, the strongest relationship with soybeans Brazilian prices.

Subsidising investment in lagging regions is an important regional policy instrument in many countries. Some argue that this instrument is not specific enough to concentrate the aid towards the regions that are lagging behind most, because investment subsidies benefit capital owners who might reside elsewhere, possibly in very rich places. Checking under which conditions this is true is thus highly policy relevant. The present paper studies regional investment subsidies in a multiregional neoclassical dynamic framework. We set up a model with trade in heterogeneous goods, with a perfectly integrated financial capital market and sluggish adjustment of regional capital stocks. Consumers and investors act under perfect foresight. We derive the equilibrium system, show how to solve it, and simulate actual European regional subsidies in computational applications. We find that the size of the welfare gains depends on the portfolio distribution held by the households. If households own diversified asset portfolios, we find that the supported regions gain roughly the amounts that are allocated to them in the form of investment subsidies. If they only own local capital stocks, a part of the money is lost through the drop in share prices. From the point of view of total welfare, the subsidy is not efficient. It can lead to a welfare loss for the EU as a whole and definitely leads to welfare losses in the rest of the world, from where investment ows to the supported EU regions.

Dans le système de la pompe biologique océanique, l'incorporation et la séquestration du carbone d'origine atmosphérique dans les sédiments marins résultent de la fixation en surface de ce carbone, suivie de son transit dans la colonne d'eau sous forme de particules carbonées. Dans la zone euphotique (0-200m), la photosynthèse par le phytoplancton joue le rôle primordial de fixateur du carbone atmosphérique dans des particules organiques consommées ensuite par les autres organismes marins hétérotrophes. La matière organique particulaire produite directement à partir du phytoplancton (comme les agrégats) ou indirectement par les organismes (par exemple les pelotes fécales) représentent le principal vecteur d'export du carbone vers l'océan profond. Dans ce contexte, l'efficacité de la pompe biologique est alors fonction de la vitesse de sédimentation des particules et finalement seules les particules dont la taille et la masse sont suffisantes parviennent jusqu'au sédiment. Ces considérations ont ainsi permis d'établir que les particules d'une taille > 500µm connues dans la littérature scientifique sous le terme de "neige marine" contribuaient significativement à l'export en profondeur. Au cours de l'expédition TARA, l'utilisation du Profileur de Vision Marine (PVM) nous a permis d'établir la distribution en taille du compartiment particulaire (> 100µm) depuis la surface jusqu'à 1500m de profondeur dans plus de 150 stations échantillonnées dans les océans majeurs. A l'aide de cette base de données, couplée aux données environnementales (physiques et biogéochimiques), nous avons cherché à évaluer l'intensité du flux particulaire (dérivé de la distribution en taille des particules) et à déterminer les processus biotiques et abiotiques modulant cet export. Dans la première partie de ce travail, une classification réalisée à partir des profils verticaux de flux a permis de mettre en évidence l'importance de la production de surface et la contribution des différentes communautés de phytoplancton (micro-, nano- et pico-phytoplancton) à l'établissement du flux particulaire sous la couche de surface, mais aussi le rôle des processus de transformation dans différentes régions océaniques dans l'atténuation du flux en profondeur. En dehors des régions à dominante oligotrophe où la quantité de matériel particulaire en surface reste extrêmement faible, nous avons constaté que l'atténuation du flux la plus faible correspondait aux "Zones à Minimum d'Oxygène" (OMZ). La deuxième partie de ce travail de thèse s'articule donc autour de l'étude des OMZ afin de comprendre les processus impliqués dans la dynamique du transfert vertical des particules. Sur la base de mesures biogéochimiques réalisées à partir de l'ensemble des capteurs (optique et imagerie), nous avons pu observer que les faibles valeurs d'atténuation de flux (k = 0,35 +/- 0,26) dans l'OMZ étaient en fait le résultat d'une réaugmentation profonde de 5 à 15% de celui-ci. Nous discutons cette réaugmentation comme étant une conséquence de l'activité des communautés mésopélagiques de zooplancton vivant sous la couche suboxique des OMZ (oxycline inférieure) tout en proposant aussi un rôle potentiel des microorganismes anaérobiques sur la dégradation et la modification de la matière organique particulaire en sédimentation dans le coeur de l'OMZ. Enfin, la dernière partie de ce travail se focalise sur la plus intense OMZ, celle de la Mer d'Arabie (Océan Indien). A l'aide d'un modèle de transport Lagrangien, nous avons évalué la possibilité d'un transport particulaire advectif depuis la côte (Golfe Persique) vers le large qui aurait pu contribuer à alimenter en matière organique la couche suboxique de l'OMZ
In the biological pump system, incorporation and sequestration of atmospheric carbon into marine sediment result of carbon fixation at ocean surface, followed by its sinking through the water column in the form of particulate carbon. In the euphotic zone (0-200m), phytoplankton photosynthesis allows carbon fixation into organic particles that are consumed by other heterotrophic organisms. Particulate organic carbon produced directly by phytoplankton (as aggregated particles) or indirectly by organisms (for example as faecal pellets) represent the main vector of carbon export to deep ocean. In this context, efficiency of the biological pump is a function of the settling speed of a particle and only those particles with sufficient mass and size reach the sediment. These considerations permit us to conclude that particles with a diameter greater than 500µm, known as "marine snow", contribute significantly to deep export. During the TARA expedition, the use of a UVP (Underwater Vision Profiler) allowed to establish the size distribution of particles (> 100µm) from the ocean surface to 1500m depth, with more than 150 sampling stations across 3 major oceans. With this database completed by environmental variables, we tried to evaluate intensity of particulate flux and identify biotic and abiotic processes influencing this export. In the first part of this work, a clustering based on flux profiles showed the importance of surface production and contribution of each phytoplanktonic community (pico-, nano- and microphytoplankton) to particulate flux under surface, but also the role of transformation processes in different oceanic regions to flux attenuation. Except in oligotrophic regions where surface particulate stock is very low, we observed that the weakest flux attenuation k = 0,35 +/- 0,26) corresponded to the "Oxygen Minimum Zones" (OMZ). The second part of this work is related to OMZ in order to understand which processes are involved in the dynamics of particulate vertical transfer. On the base of biogeochemical measurements taken by optical and image sensors, we could observe that weak attenuation values in OMZ were in fact the result of a deep increase of 5 to 15% of flux. We discuss this increase as a consequence of zooplankton mesopelagic communities activity living at the lower oxycline of the suboxic layer, but we also proposed a potential influence of anaerobic microorganisms on degradation and modification of the settling organic matter in the suboxic core. The last section of this work focuses on the most intense OMZ, located in the Arabian Sea (Indian Ocean). We used a Lagrangian particle model to evaluate the possibility of advective particulate transport from coastal area (Persian Gulf) to the open ocean, which could supply the OMZ suboxic layer with organic

Présentation d'un système d'inférence réalisant la complétion de théories équationnelles dans une structure générale. Il est montré que ce système peut être appliqué aux termes et aux polynômes et permet d'y définir une famille d'algorithmes de complétion du type de ceux de Kmith-Bendix et Buchberger. Ce système a été implémenté en CAML. La seconde partie traite la généralisation de termes et de formules logiques. Deux systèmes d'inférence sont proposés. Enfin, une méthode de généralisation de formules du calcul des prédicats du premier ordre, basée sur le formalisme polynomial en logique, est introduite

Dans cette thèse, nous étudions une nouvelle méthode de vérification des systèmes temps-réels paramétriques. Cette méthode est basée sur une logique du premier ordre temporisée (FaTE) récemment définie par D. Beauquier et À. Slissenko. Cette méthode suit "l'approche logique" : l'environnement et les requis sont décrit par des formules FOTL et le système est décrit comme une Machine à Etats Abstraits de Gurevich puis traduit en une formule FOLL. Vérifier une propriété d'un système revient donc à décider la validité d'un formule. L'avantage principal de cette méthode est sa capacité à synthétiser auromariquement les conditions exigées de l'environnement. Nous avons implanté cette méthode avec plusieurs améliorations et l'avons appliquée avec succès à deux études de cas : le problème du passage à niveau : généralisé et le "IEEE 1394 root contention protocol"
In this thesis :e investigate a nex method for verifying paramecric real-cime syste:rs. This cethod is based on a First Order Timed Logic (FOTL) recently d by D. Eoauqu and A. Iissenko. This mechoci folloxs the "logic approach" : the environnent and the renuirements are described as formulas of FOTL and the syster xhich is first described as a Gurevich Abstract State Machine is then tronclataci into a formula of FOTL. Verifying some property of e real-time system is thus reduced to decide the validity of a formula. The main advantage of this method over others is its abilitv to automatically synthesize the conditions required on the environnent. Ne have implemented this rcethod torether xith several improvements and applied it wi͏̈th success to tvo classical benchmarks the generalized railroad crossing problem and the IEEE 1394 root contention protocol

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This thesis is a collection of essays in empirical finance mainly focused on term structure models. In the first three chapters, we developed methods to extract the yield curve from government and corporate bonds. We measure the performance of such methods in pricing, Value at Risk and forecasting exercises. In its turn, the last chapter brings a discussion about the effects of different metrics of the optimal portfolio on the estimation of a CCAPM model.In the first chapter, we propose a segmented model to deal with the seasonalities appearing in real yield curves. In different markets, the short end of the real yield curve is influenced by seasonalities of the price index that imply a lack of smoothness in this segment. Borrowing from the flexibility of spline models, a B-spline function is used to fit the short end of the yield curve, while the medium and the long end are captured by a parsimonious parametric four-factor exponential model. We illustrate the benefits of the proposed term structure model by estimating real yield curves in one of the biggest government index-linked bond markets in the world. Our model is simultaneously able to fit the yield curve and to provide unbiased Value at Risk estimates for different portfolios of bonds negotiated in this market.Chapter 2 introduces a novel framework for the estimation of corporate bond spreads based on mixture models. The modeling methodology allows us to enhance the informational content used to estimate the firm level term structure by clustering firms together using observable firm characteristics. Our model builds on the previous literature linking firm level characteristics to credit spreads. Specifically, we show that by clustering firms using their observable variables, instead of the traditional matrix pricing (cluster by rating/sector), it is possible to achieve gains of several orders of magnitude in terms of bond pricing. Empirically, we construct a large panel of firm level explanatory variables based on results from a handful of previous research and evaluate their performance in explaining credit spread differences. Relying on panel data regressions we identify the most significant factors driving the credit spreads to include in our term structure model. Using this selected sample, we show that our methodology significantly improves in sample fitting as well as produces reliable out of sample price estimations when compared to the traditional models.Chapter 3 brings the paper “Forecasting the Brazilian Term Structure Using Macroeconomic Factors”, published in Brazilian Review of Econometrics (BRE). This paper studies the forecasting of the Brazilian interest rate term structure using common factors from a wide database of macroeconomic series, from the period of January 2000 to May 2012. Firstly the model proposed by Moench (2008) is implemented, in which the dynamic of the short term interest rate is modeled using a Factor Augmented VAR and the term structure is derived using the restrictions implied by no-arbitrage. Similarly to the original study, this model resulted in better predictive performance when compared to the usual benchmarks, but presented deterioration of the results with increased maturity. To avoid this problem, we proposed that the dynamic of each rate be modeled in conjunction with the macroeconomic factors, thus eliminating the no-arbitrage restrictions. This attempt produced superior forecasting results. Finally, the macro factors were inserted in a parsimonious parametric three-factor exponential model.The last chapter presents the paper “Empirical Selection of Optimal Portfolios and its Influence in the Estimation of Kreps-Porteus Utility Function Parameters”, also published in BRE. This paper investigates the effects on the estimation of parameters related to the elasticity of intertemporal substitution and risk aversion, of the selection of different portfolios to represent the optimal aggregate wealth endogenously derived in equilibrium models with Kreps-Porteus recursive utility. We argue that the usual stock market wide index is not a good portfolio to represent optimal wealth of the representative agent, and we propose as an alternative the portfolio from the Investment Fund Industry. Especially for Brazil, where that industry invests most of its resources in fixed income, the aforementioned substitution of the optimal proxy portfolio caused a significant increase in the risk aversion coefficient and the elasticity of the intertemporal substitution in consumption.

La modélisation formelle des politiques de sécurité, contrôlant l'accès aux informations sensibles, est un problème important dans de nombreux domaines. Nous avons proposé un système de contrôle d'accès appelé OrBAC (Organization based access control). Ce système apporte de nombreuses solutions aux systèmes de contrôle d'accès existants, comme la prise en compte du contexte ou encore la possibilité de représenter les différentes formes de privilèges : permission, interdiction et obligation. Cependant, ce système ne permet pas de résoudre les conflits dus aux traitements simultanés des permissions ou obligations et des interdictions. Nous avons traité ce problème dans le système OrBAC, modélisé formellement par une base de connaissances de la logique du premier ordre. Nous avons montré que les approches de gestion des incohérences proposées pour les bases propositionnelles ne sont pas appropriées dans le cas de bases du premier ordre. Nous avons proposé une solution basée sur l'affaiblissement des formules du premier ordre responsables du conflit
Modelling information security policies is being an important task in many domains. We proposed a new access control system called OrBAC (Organization based access control). This system brings many solutions to the existing access control systems. For instance, OrBAC takes into account the context and is able to represent various kinds of privileges : permission, prohibition and obligation. However, this system does not deal with conflicts due to the joint handling of permission or obligation and prohibition policies. We dealt with the problem of handling conflicts in the OrBAC system, modelled by first order logic knowledge bases. We showed that approaches suggested for handling conflicts in propositionnal knowledge bases are not adapted for inconsistent first order knowledge bases. We proposed an approach in which we weak first order formulas responsible of conflicts

Using the South African Revenue Service and National Treasury firm-level panel data for 2009–17, this paper investigates how global value chain-related trade affects the export performance of manufacturing firms in South Africa. In particular, the paper uses extant classifications of internationally traded products to identify different categories of global value chain-related products and compares the productivity premium of international traders for these different categories. Also, the paper investigates possible differences in learning-by-exporting effects across the identified categories of global value chain-related products by estimating the effect of exporting before and after entry into foreign markets. The results confirm that global value chain-related trade is associated with a higher productivity premium compared with traditional trade. However, within the categories of exporters, only the firms that trade in global value chain-related products and simultaneously engage in research and development in the post-entry periods appear to learn from exporting.

AbstractThe relationship between firm performance and the choice of globalization mode, such as exports, foreign direct investment (FDI), and foreign outsourcing (FO), has been extensively investigated. For example, Melitz (2003) theoretically predicts a premium in productivity for firms engaging in exporting goods, relative to those supplying goods only to their domestic markets.

AbstractThis chapter discusses the role of jeong in Korean Buddhist films that explore the Mahayana premise that ultimate freedom is not to be found in an escape from the world of suffering, but rather in its compassionate embrace. Focusing on Im Kwon-taek’s film AjeAje Bara Aje, this chapter suggests that the jeong fused spiritual kinship between a Buddhist disciple and her superior facilitates the former’s recognition and embrace of the abject as none other than the self. This chapter views jeong as an ethical response to the other that finds resonance with Buddhist concepts of emptiness and interdependence.

AbstractThis paper aims to explore the idea and method of using deep learning with a small amount sample to realize campus layout generation. From the perspective of the architect, we construct two small amount sample campus layout data sets through artificial screening with the preference of the specific architects. These data sets are used to train the ability of Pix2Pix model to automatically generate the campus layout under the condition of the given campus boundary and surrounding roads. Through the analysis of the experimental results, this paper finds that under the premise of effective screening of the collected samples, even using a small amount sample data set for deep learning can achieve a good result.

AbstractThe premise of this paper is that compliance with Trustworthy AI governance best practices and regulatory frameworks is an inherently fragmented process spanning across diverse organizational units, external stakeholders, and systems of record, resulting in process uncertainties and in compliance gaps that may expose organizations to reputational and regulatory risks. Moreover, there are complexities associated with meeting the specific dimensions of Trustworthy AI best practices such as data governance, conformance testing, quality assurance of AI model behaviors, transparency, accountability, and confidentiality requirements. These processes involve multiple steps, hand-offs, re-works, and human-in-the-loop oversight. In this paper, we demonstrate that process mining can provide a useful framework for gaining fact-based visibility to AI compliance process execution, surfacing compliance bottlenecks, and providing for an automated approach to analyze, remediate and monitor uncertainty in AI regulatory compliance processes.

AbstractThe present chapter concerns arguments whose conclusions take the form of a prescription such as you ought to do such-and-such, which have driven much public discussion and policy since the beginning of the COVID-19 pandemic. We aim to tackle a hitherto under-explored characteristic of many such normative arguments, namely, the relationship between evaluative and deontic propositions, depending on whether they occur as premises or conclusions in such arguments. In order to investigate how willing people are to argue from what is good to what one ought to do, and the other way round, we conducted an Inferential Judgment Experiment. Participants were presented with arguments involving deontic and evaluative propositions, and had to judge whether they could infer conclusion from premise. The stimuli that we used are tightly related to the argumentation surrounding the pandemic, regarding the measures of preventing the spread of COVID-19. The results of the study show that there is a robust inferential connection between evaluatives and deontics, but at the same time, a significant asymmetry as well. We explore several theoretical approaches to the relationship between the deontic and the evaluative realm, and test their predictions against the results of our study.

This chapter focuses on Luang Namtha traders’ role in the transnational trade of Thai fruits between Thailand and China, radiating out from a Tai Lue village in northern Thailand. They appear to have a major stake as middlemen mediating between Thai and Chinese traders’ fruit-related quality contestations. Central to this is their discourse and practice of reserving high-quality fruits for the Chinese market and mediocre fruits for the Lao market. While their view of an under-performing agricultural sector explains the import of Thai fruits, their perception of China’s economic supremacy explains the further export of premium fruits to China. Lao cross-border traders purposely reproduce a frontier of nationally stereotyped differences to enable and sustain the transnational flow of Thai fruits.

The extensive use of high-yielding varieties with high demand for fertilizers and pesticides leads to the unjudicious application of agri-inputs that leads to deterioration of precious natural resources. The world over, consumers are becoming serious about food quality, especially chemical residues. Organic farming is rising as a dynamic ‘alternate farming system' to produce safe and quality food by environmental equilibrium. The growing demand for organic food is creating new market opportunities for farmers with premium prices. Potato can also play a potential role in improving farm income through organic production. Globally, India is the second-largest potato producer producing around 53 million tonnes from 2.2 million hectares. An organic farming system consisting of an integrated approach is the best technique for achieving higher individual crop and system productivity. The current potato scenario in India suggests its diversified production and utilization in the domestic and export market leading to higher profits by way of organic potato production.

This empirical study investigates the extent to which Ugandan flower exporters are creating value and increasing their profitability through innovation activity. It uses a survey questionnaire and semi-structured in-depth interviews of managers. Primary and secondary data is used to develop financial models to estimate profitability from different combinations of innovations. Evidence shows that lines of business that are associated with the highest profitability in one period change over time, thus confirming the need for and potential benefits to be gained from innovation. It also shows that while most innovations were yielding improved profitability, others recorded lower profitability than existing business lines, an indication of value destruction from such innovations. It further demonstrates that limited progress has been made in penetrating premium export market segments. Additional results show that there is significant disparity in the ability of exporters to create value from innovation activity. The results of this study offer scope for future application of the methodology developed, provide insights on what managers should do in order to obtain the best possible financial returns from innovation activity as well as areas in which public research bodies can help exporters to reduce risks and enhance returns to innovation activity.

This paper examines creating a value chain in export honey from the Kyrgyz Republic. The annual production is 12,000 tons, 500 tons are exported. The Supply Chain Operation Reference (SCOR model) at three stages of optimization of honey production has been adapted. The following research methods were used: desk study, survey of producers and consumers, interviews with relevant organizations, personal observations retailers. At the initial stage of optimization, recommended to maintain planning of the number of bee colonies. How to effectively use natural resources for bee colonies - finding useful flora (a flowering mass of plants to collect nectar) and finding areas with the best climate (temperature, humidity, sunshine, air movement) are the objectives of action plan for interim stage. The natural mountain landscape, the sun, air, water give honey special qualities, therefore, at the final stage of market promotion, honey must acquire potential status as a unique product. For honey producers there are two optimal options for export. The first is the packaging of honey in a container of 0.1–0.2 l., and positioning it as an expensive premium product. High marketing costs are offset by high added value in the supply chain. The second is the delivery of honey in large containers of 20–30 l., for further packaging, already in the territory of the buyer. An attractive choice for honey producers with guaranteed product sales and high profitability of sales. Research results increase honey production up to 30% and export volume up to 7%.

Abstract In this paper we present our Blockchain-based solution to digitalize green LNG (liquefied natural gas); how with our digital asset, we create the differentiated-product carbon-neutrality LNG, leveraging innovation carbon-neutral business models in the natural gas eco-system. We design digital twins to represent a certain volume of non-fungible gas. We track the digital twin of a molecule, tagged with metadata. The purpose of our technical development is to create a "digital asset" (DA); a virtual representation of a volume of LNG associated with a specific LNG cargo, reflecting specific green attributes. The DA can be split into phases, corresponding to LNG supply chain steps, to represent a specific volume of GHG emitted. Our model incorporates the possibility for LNG stakeholders to offset and compensate GHG emitted they are directly/indirectly responsible for and/or accountable for. Additionally, LNG Stakeholders can interact on a specific volume (parceled), differentiating the same molecules of gas (fungible) with specific green attributes (non-fungible). We developed innovative digital assets’ features: – Fractionable (dividable digital asset, for a specific volume of LNG); – Transferable (change of ownership, for traceability along all value chain); – Transactional & Valuable (a Premium offers with evidence of low emission); and, Stackable (rewards mechanisms). This permits to provide a life-time value oriented service in a dynamic multi-actors model, to incentivize sustainable LNG with a premium, and value non-tangible assets. Lastly, we programmed a redistribution mechanism, governed by smart contracts, to transfer collected fees (value pool) to local communities, triggering positive impacts; contributing to UN SDGs achievement. Our Blockchain solution aims to establish a single origin of truth to provide LNG buyers and sellers with a decentralized interoperable view of carbon-neutral LNG cargoes; offering new capabilities to tackle issues LNG players are dealing with: clear delineation, silos approach (vs. collaborative), authoritative single source of information, data transparency, identified legitimate users, added-value generation; premium (attached / detached) in case of re-export, co-purchasing, borrowing & lending; and attribution of benefits of auditable emission intensities, including to big industrial gas consumers. LNG players can help entities meet their net-zero commitments by sourcing green LNG; supporting companies for their green/carbon neutral initiatives throughout the whole supply chain.

Deregulation and growth in the power industry are causing dramatic changes in power production and distribution. The demand for peak power and potentially high revenues due to premium electricity rates has attracted independent developers to the concept of Merchant Power Plants (MPPs). Over 100,000 MW of greenfield capacity is currently being developed through approximately 200 merchant plants in North America. These MPPs will have no captive customers or long-term power purchase agreements, but will rely on selling electricity into a volatile electricity spot market. Because of this, MPPs need the capability to export as much power as possible on demand. MPPs must also have the capability to produce significant assets in order to compete in the marketplace, based on both technical and commercial operation factors such as value engineering, life-cycle cost management, and information technology. It is no surprise then, that almost all merchant project developers have specified combined cycle (CC) technology. The CC power plant offers the highest thermal efficiency of all electric generating systems commercially available today. It also exhibits low capital costs, low emissions, fuel and operating flexibility, low operation and maintenance costs, short installation schedule, and high reliability/availability. However, since gas turbines (GTs) are the basis for CC power plants, these plants experience power output reductions in the range of 10 to 15 percent during summer months, the period most associated with peak power demand. In order to regain this loss of output as well as to provide additional power to meet peak demands, the most common options are GT inlet fogging, GT steam injection, and heat recovery steam generator (HRSG) supplemental firing. This paper focuses on plant design, cycle performance, and the economics of plant configuration associated with these options. Guidelines are presented in this paper to assist the owner in selecting power enhancement options for the MPP that will maximize their Return on Equity (ROE).

ExpressDecision2 is a general-purpose web application designed to support the individual in making difficult decisions under uncertainty, which are emotionally driven and typically solved by using rational intuition. This web app is based on the self-regulation model of the thinking process developed within the framework of the systemic-structural activity theory. This paper demonstrates the application of two customized versions of ExpressDecision2: 1. ED2StatinChoice – for making a patient-centered and shared-with-clinician decision about taking statins for cholesterol reduction to prevent a heart attack or stroke. The two primary resources regarding taking statins for cholesterol reduction are The 2018 AHA/ACC Cholesterol Guideline and Mayo Clinic Statin Choice Decision-Aid tool. These and other guidelines and decision aids, as well as information derived from a health professional, provide the patient with essential information regarding the pros and cons of using statins, while also empowering the patient to make the ultimate decision regarding whether they should take statins. Overall, such a problem is both uncertain and difficult for the patient and so requires them to establish both short- and long-term goals, as well as relevant options for selection. ED2StatinChoice is designed specifically to help the patient make the best choice in such a difficult scenario. ED2StatinChoice complements existing decision-support tools, such as the Mayo Clinic Statin Choice Decision Aid. Its method of assistance involves clarifying the goal and various choices with subsequent aggregation of all pros and cons, thus helping make a motivated decision regarding which statin therapy is most preferable. 2. ED2InsuranceChoice – for making a client-centered and potentially shared-with-agent decision about buying an insurance policy in order to reduce financial uncertainty and make accidental loss more manageable. People buy health, car, life, home and other types of insurance to protect themselves from financial loss in the event of illness, car damage, house fire and other accidents, respectively. For example, they make decisions when choosing from among liability, comprehensive and collision insurance types. This decision-making process is guided by tangible statistical factors regarding people’s risks of accidental losses and by non-tangible factors, such as “peace of mind” due to being protected against financial loss in the event of an accident. It is important to note that peace of mind is an essential and decisive factor when selecting an insurance policy. It reflects subjective justification of rate adequacy for the premium: the premium should be reasonable and coverage must be sufficient. Unfortunately, such non-tangible factors as peace of mind from being protected against financial loss in an accident, as well as anxiety from losing money while paying an insurance premium for coverage that doesn’t get used unless you have an accident are not sufficiently reflected in existing models of insurance choice.

Abstract BD Cluster green fields development located offshore Sabah, Malaysia, consists of three multi-stacked turbidite fields, namely A, B and C, encompassing thick and thin bed sands. Due to the lack of existing infrastructure in close proximity, a wellhead platform (WHP) will be installed on top of Field A. Fields B and C will be developed with a respective 8 and 7km subsea tie back to this WHP. Gas will be exported from the WHP to Facility-1 situated 5km away, whereas oil from a single thin oil rim reservoir in Field A will be exported to Facility-2 50km away. The challenges faced by the Reservoir Engineering (RE) Team was delivering an extensive number of dynamic simulations while adhering to the Field Development Planning (FDP) submission deadline: 1) uncertainty analysis and probabilistic modelling for 9 models, 2) construction of coupled reservoir models 3) screening alternative oil and gas export routes, and 4) optimizing capex phasing by determining the optimum startup sequence of the fields. Delivering the FDP work on time with the limited software licenses and computing infrastructure available on-premise appeared to be a "bridge too far". The limitations were addressed by PETRONAS LiveFDP digital transformation initiative commenced in 2019, through deployment of digital cloud technologies and solutions with scalable High-Performance Computing (HPC) environment. A total of 9 geological models were delivered to REs for dynamic simulation studies. Probabilistic modelling was then employed to obtain the dynamic P10, P50 and P90 models for each field. The Reservoir Coupling facility and Extended Network option were used in the numerical simulator to couple the standalone models in order to honor the overall facility constraints and incorporate the pipeline effects. Utilizing the coupled network model, multiple studies including condensate banking, determining optimum field sequencing and export route scenario were performed. The FDP subsurface development simulation runs were completed within 1 month using HPC cloud solutions and workflows compared to 9 months if using on-premise infrastructure. It provided the necessary tools to allow the team: 1) accurately assess the impact of condensate banking on well productivity, 2) executed over 1200 cases for probabilistic modelling for the 9 models in 24 hours of simulation time, 3) reduced the number of wells derived from a previous study from 14 to 9 yielding a saving of ~US$115 million, 4) ~US$50 million savings as a result of capex phasing by optimizing the field start up sequence, and 5) US$130 million savings by establishing the lowest cost oil and gas export route scenario.

This paper brings together authors from a diverse range of technical areas to discuss the evolving cyber threat landscape and how military forces, have transformed their capabilities to meet present-day operational challenges in cyberspace. The Internet of Things (IoT) is based on the premise that enough data can lead to new perspectives on processes and systems. With over 7 billion IoT devices connected today, experts expect that number to increase to 22 billion by 2025. They can be used to support decisions and new products and services, or they can lead to internal savings and new external revenue streams. Despite countless discussions and opinions on the definition of AI in its various facets, successful IoT implementation projects require major actors to play their part, but in conjunction with human experts to work with to make better decisions in cyberspace, improving the quality of human-machine team’s actions in asymmetric operations. The Defence domain already looking at ways to organize better human-machine teams, which promise to boost individual and team performance, reduce threats to humans, enable new operating concepts, and ultimately boost national power.

Combustion oscillations (dynamics) have become a major challenge in the development of low-emission premix combustors. Numerous recent papers have considered the various mechanisms that drive oscillations, as well as acoustic features of the combustor and fuel system that participate in sustaining unwanted oscillations. The acoustic transfer matrix technique has been used in a number of recent analyses of both the combustion and fuel injection process. In this paper, the transfer matrix analysis is combined with a reduced order model of the fuel supply to calculate the magnitude and phase of the fuel system response to imposed pressure perturbations. The analysis is used to determine if a variable geometry resonator in the fuel system can be used to adjust the phase and gain of the fuel response to enhance stability. Experimental data recorded in a research premix fuel injector show that the reduced order model accurately describes the dynamic response of the fuel entering the premix passage. Using measured acoustic properties it is also shown that the variable geometry resonator studied here can produce a phase response for fuel delivery over a range of 70 degrees, with appreciable modulation of the main fuel flow. It is suggested that this variable phase response could be used to adjust the stability properties of a given combustor.

This study deals with a new internal combustion power system with a condensing steam-gas turbine (CSGT) and a circulating fluidized bed coal boiler (CFB) to produce electricity. Heat is delivered to the system by burning gaseous fuel in the CSGT combustor and by using coal combustion heat to generate the superheated steam for injection into the CSGT combustor. The optimization analysis of this novel dual-fuel energy system addresses the thermal efficiency of electric power generation and electric power generated by the system while offering the possibility of premium gaseous fuel saving. The ecological advantages are also identified.

In Colombia, as well as in the rest of the world, the Covid-19 pandemic has seriously damaged the health and well-being of the people. In order to limit the damage, local and national authorities have had to order large sectors of the population to be confined at their homes for long periods of time. An inevitable consequence of isolation has been the collapse of economic activity, expenditure, and employment, a phenomenon that has hit many countries of the world affected by the disease. It is an unprecedented crisis in modern times, not so much for its intensity (which is undoubtedly immense), but because its origin is not economic. That is what makes it so unpredictable and difficult to manage. Naturally, its economic consequences are enormous. Governments and central banks from all over the world are struggling to mitigate them, but the final solution is not in the hands of the economic authorities. Only science can provide a way out. In the meantime, the economic indicators in Colombia and in the rest of the world cause concern. The output falls, the massive loss of jobs, and the closure of businesses of all sizes have become daily news. Added to this, there is the deterioration in global financial conditions and the increase in the risk indicators. Financial volatility has increased and stock indexes have fallen. In the face of the lower global demand, export prices of raw materials have fallen, affecting the terms of trade for producing countries. Workers’ remittances have declined due to the increase of unemployment in developed countries. This crisis has also generated a strong reduction of global trade of goods and services, and effects on the global value chains. Central banks around the world have reacted decisively and quickly with strong liquidity injections and significant cuts to their interest rates. By mid-July, such determined response had succeeded to revert much of the initial deterioration in global financial conditions. The stock exchanges stopped their fall, and showed significant recovery in several countries. Risk premia, which at the beginning of the crisis took an unusual leap, recorded substantial corrections. Something similar happened with the volatility indexes of global financial markets, which exhibited significant improvement. Flexibilization of confinement measures in some economies, broad global liquidity, and fiscal policy measures have also contributed to improve global external financial conditions, albeit with indicators that still do not return to their pre-Covid levels.

1.1 Macroeconomic summary Economic recovery has consistently outperformed the technical staff’s expectations following a steep decline in activity in the second quarter of 2020. At the same time, total and core inflation rates have fallen and remain at low levels, suggesting that a significant element of the reactivation of Colombia’s economy has been related to recovery in potential GDP. This would support the technical staff’s diagnosis of weak aggregate demand and ample excess capacity. The most recently available data on 2020 growth suggests a contraction in economic activity of 6.8%, lower than estimates from January’s Monetary Policy Report (-7.2%). High-frequency indicators suggest that economic performance was significantly more dynamic than expected in January, despite mobility restrictions and quarantine measures. This has also come amid declines in total and core inflation, the latter of which was below January projections if controlling for certain relative price changes. This suggests that the unexpected strength of recent growth contains elements of demand, and that excess capacity, while significant, could be lower than previously estimated. Nevertheless, uncertainty over the measurement of excess capacity continues to be unusually high and marked both by variations in the way different economic sectors and spending components have been affected by the pandemic, and by uneven price behavior. The size of excess capacity, and in particular the evolution of the pandemic in forthcoming quarters, constitute substantial risks to the macroeconomic forecast presented in this report. Despite the unexpected strength of the recovery, the technical staff continues to project ample excess capacity that is expected to remain on the forecast horizon, alongside core inflation that will likely remain below the target. Domestic demand remains below 2019 levels amid unusually significant uncertainty over the size of excess capacity in the economy. High national unemployment (14.6% for February 2021) reflects a loose labor market, while observed total and core inflation continue to be below 2%. Inflationary pressures from the exchange rate are expected to continue to be low, with relatively little pass-through on inflation. This would be compatible with a negative output gap. Excess productive capacity and the expectation of core inflation below the 3% target on the forecast horizon provide a basis for an expansive monetary policy posture. The technical staff’s assessment of certain shocks and their expected effects on the economy, as well as the presence of several sources of uncertainty and related assumptions about their potential macroeconomic impacts, remain a feature of this report. The coronavirus pandemic, in particular, continues to affect the public health environment, and the reopening of Colombia’s economy remains incomplete. The technical staff’s assessment is that the COVID-19 shock has affected both aggregate demand and supply, but that the impact on demand has been deeper and more persistent. Given this persistence, the central forecast accounts for a gradual tightening of the output gap in the absence of new waves of contagion, and as vaccination campaigns progress. The central forecast continues to include an expected increase of total and core inflation rates in the second quarter of 2021, alongside the lapse of the temporary price relief measures put in place in 2020. Additional COVID-19 outbreaks (of uncertain duration and intensity) represent a significant risk factor that could affect these projections. Additionally, the forecast continues to include an upward trend in sovereign risk premiums, reflected by higher levels of public debt that in the wake of the pandemic are likely to persist on the forecast horizon, even in the context of a fiscal adjustment. At the same time, the projection accounts for the shortterm effects on private domestic demand from a fiscal adjustment along the lines of the one currently being proposed by the national government. This would be compatible with a gradual recovery of private domestic demand in 2022. The size and characteristics of the fiscal adjustment that is ultimately implemented, as well as the corresponding market response, represent another source of forecast uncertainty. Newly available information offers evidence of the potential for significant changes to the macroeconomic scenario, though without altering the general diagnosis described above. The most recent data on inflation, growth, fiscal policy, and international financial conditions suggests a more dynamic economy than previously expected. However, a third wave of the pandemic has delayed the re-opening of Colombia’s economy and brought with it a deceleration in economic activity. Detailed descriptions of these considerations and subsequent changes to the macroeconomic forecast are presented below. The expected annual decline in GDP (-0.3%) in the first quarter of 2021 appears to have been less pronounced than projected in January (-4.8%). Partial closures in January to address a second wave of COVID-19 appear to have had a less significant negative impact on the economy than previously estimated. This is reflected in figures related to mobility, energy demand, industry and retail sales, foreign trade, commercial transactions from selected banks, and the national statistics agency’s (DANE) economic tracking indicator (ISE). Output is now expected to have declined annually in the first quarter by 0.3%. Private consumption likely continued to recover, registering levels somewhat above those from the previous year, while public consumption likely increased significantly. While a recovery in investment in both housing and in other buildings and structures is expected, overall investment levels in this case likely continued to be low, and gross fixed capital formation is expected to continue to show significant annual declines. Imports likely recovered to again outpace exports, though both are expected to register significant annual declines. Economic activity that outpaced projections, an increase in oil prices and other export products, and an expected increase in public spending this year account for the upward revision to the 2021 growth forecast (from 4.6% with a range between 2% and 6% in January, to 6.0% with a range between 3% and 7% in April). As a result, the output gap is expected to be smaller and to tighten more rapidly than projected in the previous report, though it is still expected to remain in negative territory on the forecast horizon. Wide forecast intervals reflect the fact that the future evolution of the COVID-19 pandemic remains a significant source of uncertainty on these projections. The delay in the recovery of economic activity as a result of the resurgence of COVID-19 in the first quarter appears to have been less significant than projected in the January report. The central forecast scenario expects this improved performance to continue in 2021 alongside increased consumer and business confidence. Low real interest rates and an active credit supply would also support this dynamic, and the overall conditions would be expected to spur a recovery in consumption and investment. Increased growth in public spending and public works based on the national government’s spending plan (Plan Financiero del Gobierno) are other factors to consider. Additionally, an expected recovery in global demand and higher projected prices for oil and coffee would further contribute to improved external revenues and would favor investment, in particular in the oil sector. Given the above, the technical staff’s 2021 growth forecast has been revised upward from 4.6% in January (range from 2% to 6%) to 6.0% in April (range from 3% to 7%). These projections account for the potential for the third wave of COVID-19 to have a larger and more persistent effect on the economy than the previous wave, while also supposing that there will not be any additional significant waves of the pandemic and that mobility restrictions will be relaxed as a result. Economic growth in 2022 is expected to be 3%, with a range between 1% and 5%. This figure would be lower than projected in the January report (3.6% with a range between 2% and 6%), due to a higher base of comparison given the upward revision to expected GDP in 2021. This forecast also takes into account the likely effects on private demand of a fiscal adjustment of the size currently being proposed by the national government, and which would come into effect in 2022. Excess in productive capacity is now expected to be lower than estimated in January but continues to be significant and affected by high levels of uncertainty, as reflected in the wide forecast intervals. The possibility of new waves of the virus (of uncertain intensity and duration) represents a significant downward risk to projected GDP growth, and is signaled by the lower limits of the ranges provided in this report. Inflation (1.51%) and inflation excluding food and regulated items (0.94%) declined in March compared to December, continuing below the 3% target. The decline in inflation in this period was below projections, explained in large part by unanticipated increases in the costs of certain foods (3.92%) and regulated items (1.52%). An increase in international food and shipping prices, increased foreign demand for beef, and specific upward pressures on perishable food supplies appear to explain a lower-than-expected deceleration in the consumer price index (CPI) for foods. An unexpected increase in regulated items prices came amid unanticipated increases in international fuel prices, on some utilities rates, and for regulated education prices. The decline in annual inflation excluding food and regulated items between December and March was in line with projections from January, though this included downward pressure from a significant reduction in telecommunications rates due to the imminent entry of a new operator. When controlling for the effects of this relative price change, inflation excluding food and regulated items exceeds levels forecast in the previous report. Within this indicator of core inflation, the CPI for goods (1.05%) accelerated due to a reversion of the effects of the VAT-free day in November, which was largely accounted for in February, and possibly by the transmission of a recent depreciation of the peso on domestic prices for certain items (electric and household appliances). For their part, services prices decelerated and showed the lowest rate of annual growth (0.89%) among the large consumer baskets in the CPI. Within the services basket, the annual change in rental prices continued to decline, while those services that continue to experience the most significant restrictions on returning to normal operations (tourism, cinemas, nightlife, etc.) continued to register significant price declines. As previously mentioned, telephone rates also fell significantly due to increased competition in the market. Total inflation is expected to continue to be affected by ample excesses in productive capacity for the remainder of 2021 and 2022, though less so than projected in January. As a result, convergence to the inflation target is now expected to be somewhat faster than estimated in the previous report, assuming the absence of significant additional outbreaks of COVID-19. The technical staff’s year-end inflation projections for 2021 and 2022 have increased, suggesting figures around 3% due largely to variation in food and regulated items prices. The projection for inflation excluding food and regulated items also increased, but remains below 3%. Price relief measures on indirect taxes implemented in 2020 are expected to lapse in the second quarter of 2021, generating a one-off effect on prices and temporarily affecting inflation excluding food and regulated items. However, indexation to low levels of past inflation, weak demand, and ample excess productive capacity are expected to keep core inflation below the target, near 2.3% at the end of 2021 (previously 2.1%). The reversion in 2021 of the effects of some price relief measures on utility rates from 2020 should lead to an increase in the CPI for regulated items in the second half of this year. Annual price changes are now expected to be higher than estimated in the January report due to an increased expected path for fuel prices and unanticipated increases in regulated education prices. The projection for the CPI for foods has increased compared to the previous report, taking into account certain factors that were not anticipated in January (a less favorable agricultural cycle, increased pressure from international prices, and transport costs). Given the above, year-end annual inflation for 2021 and 2022 is now expected to be 3% and 2.8%, respectively, which would be above projections from January (2.3% and 2,7%). For its part, expected inflation based on analyst surveys suggests year-end inflation in 2021 and 2022 of 2.8% and 3.1%, respectively. There remains significant uncertainty surrounding the inflation forecasts included in this report due to several factors: 1) the evolution of the pandemic; 2) the difficulty in evaluating the size and persistence of excess productive capacity; 3) the timing and manner in which price relief measures will lapse; and 4) the future behavior of food prices. Projected 2021 growth in foreign demand (4.4% to 5.2%) and the supposed average oil price (USD 53 to USD 61 per Brent benchmark barrel) were both revised upward. An increase in long-term international interest rates has been reflected in a depreciation of the peso and could result in relatively tighter external financial conditions for emerging market economies, including Colombia. Average growth among Colombia’s trade partners was greater than expected in the fourth quarter of 2020. This, together with a sizable fiscal stimulus approved in the United States and the onset of a massive global vaccination campaign, largely explains the projected increase in foreign demand growth in 2021. The resilience of the goods market in the face of global crisis and an expected normalization in international trade are additional factors. These considerations and the expected continuation of a gradual reduction of mobility restrictions abroad suggest that Colombia’s trade partners could grow on average by 5.2% in 2021 and around 3.4% in 2022. The improved prospects for global economic growth have led to an increase in current and expected oil prices. Production interruptions due to a heavy winter, reduced inventories, and increased supply restrictions instituted by producing countries have also contributed to the increase. Meanwhile, market forecasts and recent Federal Reserve pronouncements suggest that the benchmark interest rate in the U.S. will remain stable for the next two years. Nevertheless, a significant increase in public spending in the country has fostered expectations for greater growth and inflation, as well as increased uncertainty over the moment in which a normalization of monetary policy might begin. This has been reflected in an increase in long-term interest rates. In this context, emerging market economies in the region, including Colombia, have registered increases in sovereign risk premiums and long-term domestic interest rates, and a depreciation of local currencies against the dollar. Recent outbreaks of COVID-19 in several of these economies; limits on vaccine supply and the slow pace of immunization campaigns in some countries; a significant increase in public debt; and tensions between the United States and China, among other factors, all add to a high level of uncertainty surrounding interest rate spreads, external financing conditions, and the future performance of risk premiums. The impact that this environment could have on the exchange rate and on domestic financing conditions represent risks to the macroeconomic and monetary policy forecasts. Domestic financial conditions continue to favor recovery in economic activity. The transmission of reductions to the policy interest rate on credit rates has been significant. The banking portfolio continues to recover amid circumstances that have affected both the supply and demand for loans, and in which some credit risks have materialized. Preferential and ordinary commercial interest rates have fallen to a similar degree as the benchmark interest rate. As is generally the case, this transmission has come at a slower pace for consumer credit rates, and has been further delayed in the case of mortgage rates. Commercial credit levels stabilized above pre-pandemic levels in March, following an increase resulting from significant liquidity requirements for businesses in the second quarter of 2020. The consumer credit portfolio continued to recover and has now surpassed February 2020 levels, though overall growth in the portfolio remains low. At the same time, portfolio projections and default indicators have increased, and credit establishment earnings have come down. Despite this, credit disbursements continue to recover and solvency indicators remain well above regulatory minimums. 1.2 Monetary policy decision In its meetings in March and April the BDBR left the benchmark interest rate unchanged at 1.75%.

Le document définit dans un premier chapitre ce que sont les identifiants et les registres, leur rôle et leur importance, les attentes en matière de science ouverte. Dans un second chapitre, le comité pour la science ouverte expose son programme d’actions à l’échelle nationale pour les identifiants des publications scientifiques et des données de la recherche.

Le document définit dans un premier chapitre ce que sont les identifiants et les registres, leur rôle et leur importance, les attentes en matière de science ouverte. Dans un second chapitre, le comité pour la science ouverte expose son programme d’actions à l’échelle nationale pour les identifiants des publications scientifiques et des données de la recherche.

In the second quarter, annual inflation (9.67%), the technical staff’s projections and its expectations continued to increase, remaining above the target. International cost shocks, accentuated by Russia's invasion of Ukraine, have been more persistent than projected, thus contributing to higher inflation. The effects of indexation, higher than estimated excess demand, a tighter labor market, inflation expectations that continue to rise and currently exceed 3%, and the exchange rate pressures add to those described above. High core inflation measures as well as in the producer price index (PPI) across all baskets confirm a significant spread in price increases. Compared to estimates presented in April, the new forecast trajectory for headline and core inflation increased. This was partly the result of greater exchange rate pressure on prices, and a larger output gap, which is expected to remain positive for the remainder of 2022 and which is estimated to close towards yearend 2023. In addition, these trends take into account higher inflation rate indexation, more persistent above-target inflation expectations, a quickening of domestic fuel price increases due to the correction of lags versus the parity price and higher international oil price forecasts. The forecast supposes a good domestic supply of perishable foods, although it also considers that international prices of processed foods will remain high. In terms of the goods sub-basket, the end of the national health emergency implies a reversal of the value-added tax (VAT) refund applied to health and personal hygiene products, resulting in increases in the prices of these goods. Alternatively, the monetary policy adjustment process and the moderation of external shocks would help inflation and its expectations to begin to decrease over time and resume their alignment with the target. Thus, the new projection suggests that inflation could remain high for the second half of 2022, closing at 9.7%. However, it would begin to fall during 2023, closing the year at 5.7%. These forecasts are subject to significant uncertainty, especially regarding the future behavior of external cost shocks, the degree of indexation of nominal contracts and decisions made regarding the domestic price of fuels. Economic activity continues to outperform expectations, and the technical staff’s growth projections for 2022 have been revised upwards from 5% to 6.9%. The new forecasts suggest higher output levels that would continue to exceed the economy’s productive capacity for the remainder of 2022. Economic growth during the first quarter was above that estimated in April, while economic activity indicators for the second quarter suggest that the GDP could be expected to remain high, potentially above that of the first quarter. Domestic demand is expected to maintain a positive dynamic, in particular, due to the household consumption quarterly growth, as suggested by vehicle registrations, retail sales, credit card purchases and consumer loan disbursement figures. A slowdown in the machinery and equipment imports from the levels observed in March contrasts with the positive performance of sales and housing construction licenses, which indicates an investment level similar to that registered for the first three months of the year. International trade data suggests the trade deficit would be reduced as a consequence of import levels that would be lesser than those observed in the first quarter, and stable export levels. For the remainder of the year and 2023, a deceleration in consumption is expected from the high levels seen during the first half of the year, partially as a result of lower repressed demand, tighter domestic financial conditions and household available income deterioration due to increased inflation. Investment is expected to continue its slow recovery while remaining below pre-pandemic levels. The trade deficit is expected to tighten due to projected lower domestic demand dynamics, and high prices of oil and other basic goods exported by the country. Given the above, economic growth in the second quarter of 2022 would be 11.5%, and for 2022 and 2023 an annual growth of 6.9% and 1.1% is expected, respectively. Currently, and for the remainder of 2022, the output gap would be positive and greater than that estimated in April, and prices would be affected by demand pressures. These projections continue to be affected by significant uncertainty associated with global political tensions, the expected adjustment of monetary policy in developed countries, external demand behavior, changes in country risk outlook, and the future developments in domestic fiscal policy, among others. The high inflation levels and respective expectations, which exceed the target of the world's main central banks, largely explain the observed and anticipated increase in their monetary policy interest rates. This environment has tempered the growth forecast for external demand. Disruptions in value chains, rising international food and energy prices, and expansionary monetary and fiscal policies have contributed to the rise in inflation and above-target expectations seen by several of Colombia’s main trading partners. These cost and price shocks, heightened by the effects of Russia's invasion of Ukraine, have been more prevalent than expected and have taken place within a set of output and employment recovery, variables that in some countries currently equal or exceed their projected long-term levels. In response, the U.S. Federal Reserve accelerated the pace of the benchmark interest rate increase and rapidly reduced liquidity levels in the money market. Financial market actors expect this behavior to continue and, consequently, significantly increase their expectations of the average path of the Fed's benchmark interest rate. In this setting, the U.S. dollar appreciated versus the peso in the second quarter and emerging market risk measures increased, a behavior that intensified for Colombia. Given the aforementioned, for the remainder of 2022 and 2023, the Bank's technical staff increased the forecast trajectory for the Fed's interest rate and reduced the country's external demand growth forecast. The projected oil price was revised upward over the forecast horizon, specifically due to greater supply restrictions and the interruption of hydrocarbon trade between the European Union and Russia. Global geopolitical tensions, a tightening of monetary policy in developed economies, the increase in risk perception for emerging markets and the macroeconomic imbalances in the country explain the increase in the projected trajectory of the risk premium, its trend level and the neutral real interest rate1. Uncertainty about external forecasts and their consequent impact on the country's macroeconomic scenario remains high, given the unpredictable evolution of the conflict between Russia and Ukraine, geopolitical tensions, the degree of the global economic slowdown and the effect the response to recent outbreaks of the pandemic in some Asian countries may have on the world economy. This macroeconomic scenario that includes high inflation, inflation forecasts, and expectations above 3% and a positive output gap suggests the need for a contractionary monetary policy that mitigates the risk of the persistent unanchoring of inflation expectations. In contrast to the forecasts of the April report, the increase in the risk premium trend implies a higher neutral real interest rate and a greater prevailing monetary stimulus than previously estimated. For its part, domestic demand has been more dynamic, with a higher observed and expected output level that exceeds the economy’s productive capacity. The surprising accelerations in the headline and core inflation reflect stronger and more persistent external shocks, which, in combination with the strength of aggregate demand, indexation, higher inflation expectations and exchange rate pressures, explain the upward projected inflation trajectory at levels that exceed the target over the next two years. This is corroborated by the inflation expectations of economic analysts and those derived from the public debt market, which continued to climb and currently exceed 3%. All of the above increase the risk of unanchoring inflation expectations and could generate widespread indexation processes that may push inflation away from the target for longer. This new macroeconomic scenario suggests that the interest rate adjustment should continue towards a contractionary monetary policy landscape. 1.2. Monetary policy decision Banco de la República’s Board of Directors (BDBR), at its meetings in June and July 2022, decided to continue adjusting its monetary policy. At its June meeting, the BDBR decided to increase the monetary policy rate by 150 basis points (b.p.) and its July meeting by majority vote, on a 150 b.p. increase thereof at its July meeting. Consequently, the monetary policy interest rate currently stands at 9.0% . 1 The neutral real interest rate refers to the real interest rate level that is neither stimulative nor contractionary for aggregate demand and, therefore, does not generate pressures that lead to the close of the output gap. In a small, open economy like Colombia, this rate depends on the external neutral real interest rate, medium-term components of the country risk premium, and expected depreciation. Box 1: A Weekly Indicator of Economic Activity for Colombia Juan Pablo Cote Carlos Daniel Rojas Nicol Rodriguez Box 2: Common Inflationary Trends in Colombia Carlos D. Rojas-Martínez Nicolás Martínez-Cortés Franky Juliano Galeano-Ramírez Box 3: Shock Decomposition of 2021 Forecast Errors Nicolás Moreno Arias

1.1 Macroeconomic summary In September, headline inflation (11.4% annually) and the average of core inflation indicators (8.6% annually) continued on a rising trend, and higher increases than expected were recorded. Forecasts increased again, and inflation expectations remained above 3%. Inflationary surprises in the third quarter were significant and widespread, and they are the result of several shocks. On the one hand, international cost and price shocks, which have mainly affected goods and foods, continue to exert upwards pressure on national inflation. In addition to these external supply shocks, domestic supply shocks have also affected foods. On the other hand, the strong recovery of aggregate demand, especially for private consumption and for machinery and equipment, as well as a higher accumulated depreciation of the Colombian peso and its pass-through to domestic prices also explain the rise in inflation. Indexation also contributes, both through the Consumer Price Index (CPI) and through the Producer Price Index (PPI), which continues to have a significant impact on electricity prices and, to a lesser degree, on other public utilities and rent. In comparison with July’s report, the new forecast trajectory for headline and core inflation (excluding food and regulated items) is higher in the forecast horizon, mainly due to exchange rate pressures, higher excess demand, and indexation at higher inflation rates, but it maintains a trend of convergence towards the target. In the case of food, a good domestic supply of perishable foods and some moderation in international processed food prices are still expected. However, the technical staff estimates higher pressures on this group’s prices from labor costs, raw material prices, and exchange rates. In terms of the CPI for regulated items, the new forecast supposes reductions in electricity prices at the end of the year, but the effects of indexation at higher inflation rates and the expected rises in fuel prices would continue to push this CPI group. Therefore, the new projection suggests that, in December, inflation would reach 11.3% and would decrease throughout 2023 and 2024, closing the year at 7.1% and 3.5%, respectively. These forecasts have a high level of uncertainty, due especially to the future behavior of international financial conditions, external price and cost shocks, the persistence of depreciation of the Colombian peso, the pace of adjustment of domestic demand, the indexation degree of nominal contracts, and the decisions that would be made regarding domestic fuel and electricity prices. Economic activity continues to surprise on the upside, and the projection of growth for 2022 rose from 6.9% to 7.9% but lowered for 2023 from 1.1% to 0.5%. Thus, excess demand is higher than estimated in the previous report, and it would diminish in 2023. Economic growth in the second quarterwas higher than estimated in July due to stronger domestic demand, mainly because of private consumption. Economic activity indicators for the third quarter suggest that the GDP would stay at a high level, above its potential, with an annual change of 6.4%, and 0.6% higher than observed in the second quarter. Nevertheless, these numbers reflect deceleration in its quarterly and annual growth. Domestic demand would show similar behavior, with a high value, higher than that of output. This can be explained partly by the strong behavior of private consumption and investment in machinery and equipment. In the third quarter, investment in construction would have continued with mediocre performance, which would still place it at levels lower than those observed before the pandemic. The trade deficit would have widened due to high imports with a stronger trend than that for exports. It is expected that, in the forecast horizon, consumption would decrease from its current high levels, partly as a consequence of tighter domestic financial conditions, lower repressed demand, higher exchange rate pressures on imported goods prices, and the deterioration of actual income due to the rise in inflation. Investment would continue to lag behind, without reaching the levels observed before the pandemic, in a context of high financing costs and high uncertainty. A lower projected behavior in domestic demand and the high levels of prices for oil and other basic goods that the country exports would be reflected in a reduction in the trade deficit. Due to all of this, economic growth for all of 2022, 2023, and 2024 would be 7.9%, 0.5%, and 1.3%, respectively. Expected excess demand (measured via the output gap) is estimated to be higher than contemplated in the previous report; it would diminish in 2023 and could turn negative in 2024. These estimates remain subject to a high degree of uncertainty related to global political tension, a rise in international interest rates, and the effects of this rise on demand and financial conditions abroad. In the domestic context, the evolution of fiscal policy as well as future measures regarding economic policy and their possible effects on macroeconomic imbalances in the country, among others, are factors that generate uncertainty and affect risk premia, the exchange rate, investment, and the country’s economic activity. Interest rates at several of the world’s main central banks continue to rise, some at a pace higher than expected by the market. This is in response to the high levels of inflation and their inflation expectations, which continue to exceed the targets. Thus, global growth projections are still being moderated, risk premia have risen, and the dollar continues to gain strength against other main currencies. International pressures on global inflation have heightened. In the United States, core inflation has not receded, pressured by the behavior of the CPI for services and a tight labor market. Consequently, the U.S. Federal Reserve continued to increase the policy interest rate at a strong pace. This rate is expected to now reach higher levels than projected in the previous quarter. Other developed and emerging economies have also increased their policy interest rates. Thus, international financial conditions have tightened significantly, which reflects in a widespread strengthening of the dollar, increases in worldwide risk premia, and the devaluation of risky assets. Recently, these effects have been stronger in Colombia than in the majority of its peers in the region. Considering all of the aforementioned, the technical staff of the bank increased its assumption regarding the U.S. Federal Reserve’s interest rate, reduced the country’s external demand growth forecast, and raised the projected trajectory for the risk premium. The latter remains elevated at higher levels than its historical average, within a context of high local uncertainty and of extensive financing needs from the foreign sector and the public sector. All of this results in higher inflationary pressures associated to the depreciation of the Colombian peso. The uncertainty regarding external forecasts and its impact on the country remain elevated, given the unforeseeable evolution of the conflict between Russia and Ukraine, of geopolitical tensions, and of the tightening of external financial conditions, among others. A macroeconomic context of high inflation, inflation expectations and forecasts above 3%, and a positive output gap suggests the need for contractionary monetary policy, compatible with the macroeconomic adjustment necessary to eliminate excess demand, mitigate the risk of unanchoring in inflation expectations, and guarantee convergence of inflation at the target. In comparison with the July report forecasts, domestic demand has been more dynamic, with a higher observed output level that surpasses the economy’s productive capacity. Headline and core inflation have registered surprising rises, associated with the effects of domestic and external price shocks that were more persistent than anticipated, with excess demand and indexation processes in some CPI groups. The country’s risk premium and the observed and expected international interest rates increased. As a consequence of this, inflationary pressures from the exchange rate rose, and in this report, the probability of the neutral real interest rate being higher than estimated increased. In general, inflation expectations for all terms and the bank’s technical staff inflation forecast for 2023 increased again and continue to stray from 3%. All of the aforementioned elevated the risk of unanchoring inflation expectations and could heighten widespread indexation processes that push inflation away from the target for a longer time. In this context, it is necessary to consolidate a contractionary monetary policy that tends towards convergence of inflation at the target in the forecast horizon and towards the reduction of excess demand in order to guarantee a sustainable output level trajectory. 1.2 Monetary policy decision In its September and October of 2022 meetings, Banco de la República’s Board of Directors (BDBR) decided to continue adjusting its monetary policy. In September, the BDBR decided by a majority vote to raise the monetary policy interest rate by 100 basis points (bps), and in its October meeting, unanimously, by 100bps. Therefore, the rate is at 11.0%. Boxes 1 Food inflation: a comparison with other countries

Macroeconomic summary Annual inflation continued to rise in the first quarter (8.5%) and again outpaced both market expectations and the technical staff’s projections. Inflation in major consumer price index (CPI) baskets has accelerated year-to-date, rising in March at an annual rate above 3%. Food prices (25.4%) continued to contribute most to rising inflation, mainly affected by a deterioration in external supply and rising costs of agricultural inputs. Increases in transportation prices and in some utility rates (energy and gas) can explain the acceleration in regulated items prices (8.3%). For its part, the increase in inflation excluding food and regulated items (4.5%) would be the result of shocks in supply and external costs that have been more persistent than expected, the effects of indexation, accumulated inflationary pressures from the exchange rate, and a faster-than-anticipated tightening of excess productive capacity. Within the basket excluding food and regulated items, external inflationary pressures have meaningfully impacted on goods prices (6.4%), which have been accelerating since the last quarter of 2021. Annual growth in services prices (3.8%) above the target rate is due primarily to food away from home (14.1%), which was affected by significant increases in food and utilities prices and by a rise in the legal monthly minimum wage. Housing rentals and other services prices also increased, though at rates below 3%. Forecast and expected inflation have increased and remain above the target rate, partly due to external pressures (prices and costs) that have been more persistent than projected in the January report (Graphs 1.1 and 1.2). Russia’s invasion of Ukraine accentuated inflationary pressures, particularly on international prices for certain agricultural goods and inputs, energy, and oil. The current inflation projection assumes international food prices will increase through the middle of this year, then remain high and relatively stable for the remainder of 2022. Recovery in the perishable food supply is forecast to be less dynamic than previously anticipated due to high agricultural input prices. Oil prices should begin to recede starting in the second half of the year, but from higher levels than those presented in the previous report. Given the above, higher forecast inflation could accentuate indexation effects and increase inflation expectations. The reversion of a rebate on value-added tax (VAT) applied to cleaning and hygiene products, alongside the end of Colombia’s COVID-19 health emergency, could increase the prices of those goods. The elimination of excess productive capacity on the forecast horizon, with an output gap close to zero and somewhat higher than projected in January, is another factor to consider. As a consequence, annual inflation is expected to remain at high levels through June. Inflation should then decline, though at a slower pace than projected in the previous report. The adjustment process of the monetary policy rate wouldcontribute to pushing inflation and its expectations toward the target on the forecast horizon. Year-end inflation for 2022 is expected to be around 7.1%, declining to 4.8% in 2023. Economic activity again outperformed expectations. The technical staff’s growth forecast for 2022 has been revised upward from 4.3% to 5% (Graph 1.3). Output increased more than expected in annual terms in the fourth quarter of 2021 (10.7%), driven by domestic demand that came primarily because of private consumption above pre-pandemic levels. Investment also registered a significant recovery without returning to 2019 levels and with mixed performance by component. The trade deficit increased, with significant growth in imports similar to that for exports. The economic tracking indicator (ISE) for January and February suggested that firstquarter output would be higher than previously expected and that the positive demand shock observed at the end of 2021 could be fading slower than anticipated. Imports in consumer goods, retail sales figures, real restaurant and hotel income, and credit card purchases suggest that household spending continues to be dynamic, with levels similar to those registered at the end of 2021. Project launch and housing starts figures and capital goods import data suggest that investment also continues to recover but would remain below pre-pandemic levels. Consumption growth is expected to decelerate over the year from high levels reached over the last two quarters. This would come amid tighter domestic and external financial conditions, the exhaustion of suppressed demand, and a deterioration of available household income due to increased inflation. Investment is expected to continue to recover, while the trade deficit should tighten alongside high oil and other export commodity prices. Given all of the above, first-quarter economic growth is now expected to be 7.2% (previously 5.2%) and 5.0% for 2022 as a whole (previously 4.3%). Output growth would continue to moderate in 2023 (2.9%, previously 3.1%), converging similar to long-term rates. The technical staff’s revised projections suggest that the output gap would remain at levels close to zero on the forecast horizon but be tighter than forecast in January (Graph 1.4). These estimates continue to be affected by significant uncertainty associated with geopolitical tensions, external financial conditions, Colombia’s electoral cycle, and the COVID-19 pandemic. External demand is now projected to grow at a slower pace than previously expected amid increased global inflationary pressures, high oil prices, and tighter international financial conditions than forecast in January. The Russian invasion of Ukraine and its inflationary effects on prices for oil and certain agricultural goods and inputs accentuated existing global inflationary pressures originating in supply restrictions and increased international costs. A decline in the supply of Russian oil, low inventory levels, and continued production limits on behalf of the Organization of Petroleum Exporting Countries and its allies (OPEC+) can explain increased projected oil prices for 2022 (USD 100.8/barrel, previously USD 75.3) and 2023 (USD 86.8/barrel, previously USD 71.2). The forecast trajectory for the U.S. Federal Reserve (Fed) interest rate has increased for this and next year to reflect higher real and expected inflation and positive performance in the labormarket and economic activity. The normalization of monetary policy in various developed and emerging market economies, more persistent supply and cost shocks, and outbreaks of COVID-19 in some Asian countries contributed to a reduction in the average growth outlook for Colombia’s trade partners for 2022 (2.8%, previously 3.3%) and 2023 (2.4%, previously 2.6%). In this context, the projected path for Colombia’s risk premium increased, partly due to increased geopolitical global tensions, less expansionary monetary policy in the United States, an increase in perceived risk for emerging markets, and domestic factors such as accumulated macroeconomic imbalances and political uncertainty. Given all the above, external financial conditions are tighter than projected in January report. External forecasts and their impact on Colombia’s macroeconomic scenario continue to be affected by considerable uncertainty, given the unpredictability of both the conflict between Russia and Ukraine and the pandemic. The current macroeconomic scenario, characterized by high real inflation levels, forecast and expected inflation above 3%, and an output gap close to zero, suggests an increased risk of inflation expectations becoming unanchored. This scenario offers very limited space for expansionary monetary policy. Domestic demand has been more dynamic than projected in the January report and excess productive capacity would have tightened more quickly than anticipated. Headline and core inflation rose above expectations, reflecting more persistent and important external shocks on supply and costs. The Russian invasion of Ukraine accentuated supply restrictions and pressures on international costs. This partly explains the increase in the inflation forecast trajectory to levels above the target in the next two years. Inflation expectations increased again and are above 3%. All of this increased the risk of inflation expectations becoming unanchored and could generate indexation effects that move inflation still further from the target rate. This macroeconomic context also implies reduced space for expansionary monetary policy. 1.2 Monetary policy decision Banco de la República’s board of directors (BDBR) continues to adjust its monetary policy. In its meetings both in March and April of 2022, it decided by majority to increase the monetary policy rate by 100 basis points, bringing it to 6.0% (Graph 1.5).

Macroeconomic summary Several factors contributed to an increase in projected inflation on the forecast horizon, keeping it above the target rate. These included inflation in December that surpassed expectations (5.62%), indexation to higher inflation rates for various baskets in the consumer price index (CPI), a significant real increase in the legal minimum wage, persistent external and domestic inflationary supply shocks, and heightened exchange rate pressures. The CPI for foods was affected by the persistence of external and domestic supply shocks and was the most significant contributor to unexpectedly high inflation in the fourth quarter. Price adjustments for fuels and certain utilities can explain the acceleration in inflation for regulated items, which was more significant than anticipated. Prices in the CPI for goods excluding food and regulated items also rose more than expected. This was partly due to a smaller effect on prices from the national government’s VAT-free day than anticipated by the technical staff and more persistent external pressures, including via peso depreciation. By contrast, the CPI for services excluding food and regulated items accelerated less than expected, partly reflecting strong competition in the communications sector. This was the only major CPI basket for which prices increased below the target inflation rate. The technical staff revised its inflation forecast upward in response to certain external shocks (prices, costs, and depreciation) and domestic shocks (e.g., on meat products) that were stronger and more persistent than anticipated in the previous report. Observed inflation and a real increase in the legal minimum wage also exceeded expectations, which would boost inflation by affecting price indexation, labor costs, and inflation expectations. The technical staff now expects year-end headline inflation of 4.3% in 2022 and 3.4% in 2023; core inflation is projected to be 4.5% and 3.6%, respectively. These forecasts consider the lapse of certain price relief measures associated with the COVID-19 health emergency, which would contribute to temporarily keeping inflation above the target on the forecast horizon. It is important to note that these estimates continue to contain a significant degree of uncertainty, mainly related to the development of external and domestic supply shocks and their ultimate effects on prices. Other contributing factors include high price volatility and measurement uncertainty related to the extension of Colombia’s health emergency and tax relief measures (such as the VAT-free days) associated with the Social Investment Law (Ley de Inversión Social). The as-yet uncertain magnitude of the effects of a recent real increase in the legal minimum wage (that was high by historical standards) and high observed and expected inflation, are additional factors weighing on the overall uncertainty of the estimates in this report. The size of excess productive capacity remaining in the economy and the degree to which it is closing are also uncertain, as the evolution of the pandemic continues to represent a significant forecast risk. margin, could be less dynamic than expected. And the normalization of monetary policy in the United States could come more quickly than projected in this report, which could negatively affect international financing costs. Finally, there remains a significant degree of uncertainty related to the duration of supply chocks and the degree to which macroeconomic and political conditions could negatively affect the recovery in investment. The technical staff revised its GDP growth projection for 2022 from 4.7% to 4.3% (Graph 1.3). This revision accounts for the likelihood that a larger portion of the recent positive dynamic in private consumption would be transitory than previously expected. This estimate also contemplates less dynamic investment behavior than forecast in the previous report amid less favorable financial conditions and a highly uncertain investment environment. Third-quarter GDP growth (12.9%), which was similar to projections from the October report, and the fourth-quarter growth forecast (8.7%) reflect a positive consumption trend, which has been revised upward. This dynamic has been driven by both public and private spending. Investment growth, meanwhile, has been weaker than forecast. Available fourth-quarter data suggest that consumption spending for the period would have exceeded estimates from October, thanks to three consecutive months that included VAT-free days, a relatively low COVID-19 caseload, and mobility indicators similar to their pre-pandemic levels. By contrast, the most recently available figures on new housing developments and machinery and equipment imports suggest that investment, while continuing to rise, is growing at a slower rate than anticipated in the previous report. The trade deficit is expected to have widened, as imports would have grown at a high level and outpaced exports. Given the above, the technical staff now expects fourth-quarter economic growth of 8.7%, with overall growth for 2021 of 9.9%. Several factors should continue to contribute to output recovery in 2022, though some of these may be less significant than previously forecast. International financial conditions are expected to be less favorable, though external demand should continue to recover and terms of trade continue to increase amid higher projected oil prices. Lower unemployment rates and subsequent positive effects on household income, despite increased inflation, would also boost output recovery, as would progress in the national vaccination campaign. The technical staff expects that the conditions that have favored recent high levels of consumption would be, in large part, transitory. Consumption spending is expected to grow at a slower rate in 2022. Gross fixed capital formation (GFCF) would continue to recover, approaching its pre-pandemic level, though at a slower rate than anticipated in the previous report. This would be due to lower observed GFCF levels and the potential impact of political and fiscal uncertainty. Meanwhile, the policy interest rate would be less expansionary as the process of monetary policy normalization continues. Given the above, growth in 2022 is forecast to decelerate to 4.3% (previously 4.7%). In 2023, that figure (3.1%) is projected to converge to levels closer to the potential growth rate. In this case, excess productive capacity would be expected to tighten at a similar rate as projected in the previous report. The trade deficit would tighten more than previously projected on the forecast horizon, due to expectations of an improved export dynamic and moderation in imports. The growth forecast for 2022 considers a low basis of comparison from the first half of 2021. However, there remain significant downside risks to this forecast. The current projection does not, for example, account for any additional effects on economic activity resulting from further waves of COVID-19. High private consumption levels, which have already surpassed pre-pandemic levels by a large margin, could be less dynamic than expected. And the normalization of monetary policy in the United States could come more quickly than projected in this report, which could negatively affect international financing costs. Finally, there remains a significant degree of uncertainty related to the duration of supply chocks and the degree to which macroeconomic and political conditions could negatively affect the recovery in investment. External demand for Colombian goods and services should continue to recover amid significant global inflation pressures, high oil prices, and less favorable international financial conditions than those estimated in October. Economic activity among Colombia’s major trade partners recovered in 2021 amid countries reopening and ample international liquidity. However, that growth has been somewhat restricted by global supply chain disruptions and new outbreaks of COVID-19. The technical staff has revised its growth forecast for Colombia’s main trade partners from 6.3% to 6.9% for 2021, and from 3.4% to 3.3% for 2022; trade partner economies are expected to grow 2.6% in 2023. Colombia’s annual terms of trade increased in 2021, largely on higher oil, coffee, and coal prices. This improvement came despite increased prices for goods and services imports. The expected oil price trajectory has been revised upward, partly to supply restrictions and lagging investment in the sector that would offset reduced growth forecasts in some major economies. Elevated freight and raw materials costs and supply chain disruptions continue to affect global goods production, and have led to increases in global prices. Coupled with the recovery in global demand, this has put upward pressure on external inflation. Several emerging market economies have continued to normalize monetary policy in this context. Meanwhile, in the United States, the Federal Reserve has anticipated an end to its asset buying program. U.S. inflation in December (7.0%) was again surprisingly high and market average inflation forecasts for 2022 have increased. The Fed is expected to increase its policy rate during the first quarter of 2022, with quarterly increases anticipated over the rest of the year. For its part, Colombia’s sovereign risk premium has increased and is forecast to remain on a higher path, to levels above the 15-year-average, on the forecast horizon. This would be partly due to the effects of a less expansionary monetary policy in the United States and the accumulation of macroeconomic imbalances in Colombia. Given the above, international financial conditions are projected to be less favorable than anticipated in the October report. The increase in Colombia’s external financing costs could be more significant if upward pressures on inflation in the United States persist and monetary policy is normalized more quickly than contemplated in this report. As detailed in Section 2.3, uncertainty surrounding international financial conditions continues to be unusually high. Along with other considerations, recent concerns over the potential effects of new COVID-19 variants, the persistence of global supply chain disruptions, energy crises in certain countries, growing geopolitical tensions, and a more significant deceleration in China are all factors underlying this uncertainty. The changing macroeconomic environment toward greater inflation and unanchoring risks on inflation expectations imply a reduction in the space available for monetary policy stimulus. Recovery in domestic demand and a reduction in excess productive capacity have come in line with the technical staff’s expectations from the October report. Some upside risks to inflation have materialized, while medium-term inflation expectations have increased and are above the 3% target. Monetary policy remains expansionary. Significant global inflationary pressures and the unexpected increase in the CPI in December point to more persistent effects from recent supply shocks. Core inflation is trending upward, but remains below the 3% target. Headline and core inflation projections have increased on the forecast horizon and are above the target rate through the end of 2023. Meanwhile, the expected dynamism of domestic demand would be in line with low levels of excess productive capacity. An accumulation of macroeconomic imbalances in Colombia and the increased likelihood of a faster normalization of monetary policy in the United States would put upward pressure on sovereign risk perceptions in a more persistent manner, with implications for the exchange rate and the natural rate of interest. Persistent disruptions to international supply chains, a high real increase in the legal minimum wage, and the indexation of various baskets in the CPI to higher inflation rates could affect price expectations and push inflation above the target more persistently. These factors suggest that the space to maintain monetary stimulus has continued to diminish, though monetary policy remains expansionary. 1.2 Monetary policy decision Banco de la República’s board of directors (BDBR) in its meetings in December 2021 and January 2022 voted to continue normalizing monetary policy. The BDBR voted by a majority in these two meetings to increase the benchmark interest rate by 50 and 100 basis points, respectively, bringing the policy rate to 4.0%.