Academic literature on the topic 'GDP ENERGY INTENSITY'

The article considers the problem of increasing the energy efficiency of the economy, in particular, reducing the energy intensity of GDP. The basic factors determining the dynamics of energy intensity of GDP are analyzed. Possible scenarios of changes in the energy intensity of GDP depending on the level of GDP and domestic primary energy consumption are presented. The problem of achieving the set goals is considered. It is shown that the unattainability of the target (desired) level of energy intensity of GDP in the declared (designated) terms with the specific impact of instruments of a particular economic policy is the result of many factors. It is concluded that the set goals in energy saving were not achieved in the planned time frame, and the possibility of their implementation in the current trends of economic development (even taking into account their revision in the medium term) is not obvious. To reduce the energy intensity of GDP, it is necessary in practice to implement a decoupling strategy: to ensure economic growth without an increase in the use of resources due to their more rational use and application of the best available technologies.

Purpose To investigate whether CO2 intensity falls at a diminishing rate as countries grow richer. Design/methodology/approach Regression of CO2 intensity on the gross domestic product (GDP) per capita, including squared and cubic terms, for a panel of countries and individual countries. Findings CO2 intensity falls at a diminishing rate as countries grow richer. Originality/value Many studies have found that CO2 intensity falls with GDP per capita, but whether it does so at a diminishing rate has not been investigated. This result suggests that structural changes in GDP (more services) as countries get richer will provide little or no help toward decarbonization. It is shown that the extraction of minerals critical for industrial production has increased on par with real GDP. This could explain why CO2 emissions fall at a diminishing rate.

Since the recent energy crises, the research in this strand has increased considerably. A variety of its dimensions have been examined in the literature. For instance, higher energy prices; instability in the supplies of its various components; its rapid depletion and global warming are some of its dimensions, which have been the focus of discourse among both researchers and policy-makers. Equally, energy intensity measuring the energy consumption to GDP ratio has been an important component of energy policies [Ang (2004); Liu and Ang (2007); Jimenez and Mercado (2013)]. In particular, there is a special focus on sorting out the contribution of energy efficiency— ratio of sectoral specific energy consumption to sectoral GDP—to alienate the impact of efficiency on energy intensity from other relevant factors. This is because energy efficiency is recognised as one of the most cost-effective strategies to address crosscutting issues of energy security, climate change and competitiveness [IDB (2012)]. Consequently, the information regarding energy intensity, its efficiency or activity aspects are useful tools for policy decisions and evaluation and are regularly in practice in most of the advanced countries

Per GDP energy consumption is the main indicator of district energy-saving effect. The Article firstly analyzed the influence factors of per GDP energy consumption. Then summarized energy-saving measures as six aspects: optimizing industrial structure; reducing energy intensity of industries; reducing per capita household energy consumption; limiting resident population; improving efficiency of energy conversion; improving energy storage and transportation management level. According to implementing body, energy-saving measures are divided into government measure and enterprise measure. District energy-saving measures mainly refer to the government measures. The selection course of district energy-saving measures is divided into five steps: initial prediction of per GDP energy consumption of term-end; analysis of measures of reducing industry energy intensity, per capita household energy consumption and energy loss; second prediction of per GDP energy consumption of term-end; compare with the target value; determination of district energy-saving measures.

In the article the major trends in the energy sector of Ukraine in modern geopolitical conditions are investigated. The status and dynamics of energy security of Ukraine during 2007–2015 years are evaluated. The main factors strengthening the energy security of Ukraine in 2015 – the decrease of energy intensity of GDP and improving of the diversification of supply sources and kinds of energy resources are detected. The impact of key threats caused by geopolitical changes on the level of energy security of Ukraine is determined. The probability and preconditions of implementation of optimistic, basic, pessimistic scenarios of changes in such key factors of energy security, as energy intensity of GDP and the share of the dominant fuel in total energy consumption are substantiated. Directions of strengthening the energy security of Ukraine in terms of geopolitical transformations, comprehensive reforms of the production and import of energy production, distribution and the use of electricity; further reducing of energy intensity of GDP through economic restructuring and increasing the share of services and high-tech industries in GDP, energy efficiency enterprises of old industrial areas and their technical modernization.

This paper applies ARIMA model to predict total energy consumption and GDP in 2011-2015, and then reach a conclusion that both are showing a sharp rise trend. Through the analysis on energy intensity in 2001-2015 and energy elasticity between China and Inner Mongolia in 2001-2009, we draw a conclusion that GDP mainly depends on energy consumption and the speed of it increases more than that of GDP in Inner Mongolia. Based on above empirical analysis, we give the corresponding conclusion and suggestion for economic development as follows: prevent the rapid economic growth from high energy consumption; develop the tertiary industry and control economy growth in high energy intensity; change the structure of investment and strengthen the awareness of energy saving and environmental protection.

The Environmental Kuznets Curve is an inverted U-shaped relationship which demonstrates how environmental degradation increases as countries begin to develop and lowers as they become wealthier. The classical EKC measures the effects of GDP per capita (a country’s wealth) on pollu-tion. This paper is a study of the connection of a number of factors- GDP per capita, fossil fuels, al-ternative and nuclear energy, rural population and life expectancy at birth to the Environmental Kuznets Curve. Two econometric approaches are applied in order to test whether the variables have a more pronounced linear or quadratic form. Four income groups of countries are investigated in order to check if the state of development plays a crucial role in environmental deterioration. The results of the study point out that EKC does not apply for the chosen variables. From the regression for GDP, however, it can be concluded that EKC forms in 1990s.

Актуальность данной работы обусловлена тем, что Китай – самая большая развивающаяся страна в мире, и его потребление энергии намного больше, чем в других странах. Энергосбережение и повышение энергоэффективности экономики – это укрепление энергетической и национальной безопасности страны. Повышение энергоэффективности и энергосбережение способствуют снижению потребления природных ресурсов и сокращению вредных выбросов в окружающую среду. Объект исследования – потребление энергетических ресурсов в Китае. Предмет исследования – организационно-экономические отношения в процессе повышения энергоэффективности экономики Китая. Цель диссертационного исследования состоит в анализе современного состояния в сфере энергосбережения в мире и Китае и выработке предложений по повышению уровня энергоэффективности национальной экономики Китая. Научная новизна диссертационного исследования заключается в том, что выявлены особенности изменения структуры потребления энергетических ресурсов в стране в результате реализации энергетической политики Китая; предложено строительство фотоэлектрической солнечной электростанции в провинции Китая и проведена эколого-экономическая оценка инвестиционного проекта с применением показателя LCOE.
The relevance of this work is due to the fact that China is the largest developing country in the world, and its energy consumption is much higher than in other countries. Energy saving and increasing the energy efficiency of the economy is the strengthening of the country's energy and national security. Improving energy efficiency and saving energy helps to reduce the consumption of natural resources and reduce harmful emissions into the environment. The object of research is the consumption of energy resources in China. The subject of the research is organizational and economic relations in the process of increasing the energy efficiency of the Chinese economy. The purpose of the dissertation research is to analyze the current state of energy conservation in the world and China and to develop proposals to improve the energy efficiency of the national economy of China. The scientific novelty of the dissertation research is that the features of the change in the structure of consumption of energy resources in the country as a result of the implementation of China's energy policy are revealed; proposed the construction of a photovoltaic solar power plant in the province of China and carried out an environmental and economic assessment of the investment project using the LCOE indicator.

For the past almost fifty years, scientists have been trying to explain the phenomenon of superconductivity. The mechanism is the key ingredient of microscopic theory, which was developed by Bardeen, Cooper, and Schrieffer in 1957. The theory also introduced the basic concepts of pairing, coherence length, energy gap, and so on. Since then, microscopic theory has undergone an intensive development. This book provides a very detailed theoretical treatment of the key mechanisms of superconductivity, including the current state of the art (phonons, magnons, plasmons). In addition, the book contains descriptions of the properties of the key superconducting compounds that are of the most interest for science and applications. For many years, there has been a search for new materials with higher values of the main parameters, such as the critical temperature and critical current. At present, the possibility of observing superconductivity at room temperature has become perfectly realistic. That is why the book is especially concerned with high-Tc systems such as high-Tc oxides, hydrides with record values for critical temperature under high pressure, nanoclusters, and so on. A number of interesting novel superconducting systems have been discovered recently, including topological materials, interface systems, and intercalated graphene. The book contains rigorous derivations based on statistical mechanics and many-body theory. The book also provides qualitative explanations of the main concepts and results. This makes the book accessible and interesting for a broad audience.

Abstract Verification algorithms are among the most resource-intensive computation tasks. Saving energy is important for our living environment and to save cost in data centers. Yet, researchers compare the efficiency of algorithms still in terms of consumption of CPU time (or even wall time). Perhaps one reason for this is that measuring energy consumption of computational processes is not as convenient as measuring the consumed time and there is no sufficient tool support. To close this gap, we contribute CPU Energy Meter, a small tool that takes care of reading the energy values that Intel CPUs track inside the chip. In order to make energy measurements as easy as possible, we integrated CPU Energy Meter into BenchExec, a benchmarking tool that is already used by many researchers and competitions in the domain of formal methods. As evidence for usefulness, we explored the energy consumption of some state-of-the-art verifiers and report some interesting insights, for example, that energy consumption is not necessarily correlated with CPU time.

Abstract Using a computable general equilibrium (CGE) model, this paper investigates the impact of carbon regulations on the Japanese economy. We use an 11-sector, 15-region global dynamic CGE model with a time span from 2011 to 2050. We assume that Japan (along with other developed regions) reduces CO2 emissions by 80% by 2050 and analyze the impact on the Japanese economy. In particular, we consider multiple scenarios of CO2 reduction rates in less developed regions and analyze how changes in CO2 reduction in these regions affect Japan. In addition, we also consider multiple scenarios of the use of a border adjustment policy and analyze its impact. Our simulation results are summarized as follows. First, an 80% CO2 reduction in Japan generates large negative impacts on the Japanese economy in terms of both the macroeconomy and individual sectors. Second, changes in the reduction rates in less developed regions have only a small impact on Japan. Third, the use of border adjustment in Japan has a small impact on the GDP and welfare of Japan overall but a large impact on output in the energy intensive sectors. When future climate change policies in Japan are discussed, much attention is usually paid to climate policy in less developed regions. However, the second result of our analysis suggests that climate change policy in less developed regions has only a small impact on Japan. In addition, the third result indicates that the effectiveness of border adjustment is limited.

This chapter examines the role of energy in the economic growth of twentieth-century Europe. It considers the interrelationships of factors of production in order to identify the general features of a shared experience of growth, rather than to illuminate the local differences. The chapter first explains how development blocks contributed to GDP growth before discussing seven long-run propositions, including the strong growth of capital stock and catch-up with the leader of capital–GDP ratios; machinery increased more than GDP, labor, and other capital; and falling and converging energy intensity in the twentieth century. The chapter concludes with an overview of the link between energy intensity and economic structure. It argues that it was the third industrial revolution that was behind most of the increasing economic efficiency of energy consumption after the 1970s.

Over the last decade there has been a gradual change in the global energy landscape, with fast-growing emerging markets overtaking the traditional centers in terms of energy demand. International Energy Outlook 2017 forecasts that energy consumption in non-OECD countries would increase by 41% between 2015 and 2040 in contrast to a 9% increase in OECD countries. The chapter focuses on two major areas: (1) examining the changing pattern of the composition of energy use in the two selected countries of Asia (India and China) and (2) examining the short-run and long-run relationship among energy use, GDP per capita, energy intensity, use of electricity power, extent of urbanization. Using ARDL bound test for the period 1990 to 2014 for the World Development Indicator data 2017-18, it reveals that the powerhouses of global energy demand growth are led by the developing economies of Asia (i.e., China, India, Indonesia, Morocco, Brazil, Singapore, and Thailand). In the case of India, a long-run association has been found between energy use and GDP per capita, energy intensity, use of electricity power, and extent of urbanization, but no instances are for China.

Over the last decade there has been a gradual change in the global energy landscape, with fast-growing emerging markets overtaking the traditional centers in terms of energy demand. International Energy Outlook 2017 forecasts that energy consumption in non-OECD countries would increase by 41% between 2015 and 2040 in contrast to a 9% increase in OECD countries. The chapter focuses on two major areas: (1) examining the changing pattern of the composition of energy use in the two selected countries of Asia (India and China) and (2) examining the short-run and long-run relationship among energy use, GDP per capita, energy intensity, use of electricity power, extent of urbanization. Using ARDL bound test for the period 1990 to 2014 for the World Development Indicator data 2017-18, it reveals that the powerhouses of global energy demand growth are led by the developing economies of Asia (i.e., China, India, Indonesia, Morocco, Brazil, Singapore, and Thailand). In the case of India, a long-run association has been found between energy use and GDP per capita, energy intensity, use of electricity power, and extent of urbanization, but no instances are for China.

Over the next two or three decades a new energy economy should begin to take shape in the developed industrial countries. This will not be a post-fossil fuel economy. But it could be an economy in which non-fossil sources play a more important role; where efficiency in the production, distribution, and use of energy is significantly enhanced; where new storage and carrier technologies are being adopted; and where the fossil sector is being transformed by the imperative of carbon sequestration. Such an energy economy would represent a critical staging post in a much longer transition towards a carbon neutral, low-environmental impact, energy system. The extent to which a new energy economy actually materializes will depend on many factors including the pace and orientation of international economic development, the rate and direction of technological innovation and diffusion, as well as patterns of geo-strategic cooperation and conflict. But there is no doubt the trajectory will be significantly influenced by political decisions and government action on the energy file. This is the issue with which this chapter is concerned. At the moment there are two main political drivers for the move to look beyond oil. First, there are supply concerns. Increasing global demand, production bottlenecks, and political instability have pushed oil prices towards historic highs. Although the oil intensity (oil consumption per unit of GDP) of the OECD economies is less than during the oil crises of the 1970s (IMF, 2005), there is no doubt that the long term economic impact of high oil prices would be considerable. There are also critical issues associated with the geographic distribution of reserves. Production from areas opened up following the turbulence of the early 1970s (such as the North Sea) is peaking. In coming years the United States will be more heavily dependent on imported oil, with an increasing percentage of these imports destined to come from politically volatile areas in the Middle East and Asia. And this presents a serious risk of supply disruption.

The Sustainability value parity framework is proposed to deepen the understanding of the importance of ‘inter-relatedness' of water-energy-waste with the goal of balancing water usage, aligning energy intensity and optimizing waste utilization. Generic waste that is burgeoning is a deterrent to the practice of sustainability that aligns water, energy, infrastructure, health, food, and lifestyle (Sachs, 2007). This chapter delineates the gap between globalization at the macro-level and global citizenry at the grassroots-base and posits a value bridge assessed by appropriate thresholds of water - energy - waste. The emergent need to strengthen climate resilience and to usher into the sustainable pathway of climate-proofed development needs tuning of processes, lifestyle, hazardous substances and consumption. Climate change manifests as an over-arching risk that is strewn with unpredictability, multiple dimensions, uncertainties, spikes, imbalances leading to inequity.

Large volumes of unconventional fossil resource are untapped because of the capillary forces, which kept the oil stranded underground. Furthermore, with the increasing demand for sustainable energy and the rising attention geared towards environment protection, there is a vital need to develop materials that bridge the gap between the fossil and renewable resources effectively. An intensive attention has been given to nanomaterials, which from their native features could increase either the energy storage or improve the recovery of fossil energy. The present chapter, therefore, presents the recent advancements of nanotechnology towards the production of unconventional resources and renewable energy. The chapter focuses primarily on nanomaterials applications for both fossils and renewable energies. The chapter is not intended to be an exhaustive representation of nanomaterials, rather it aims at broadening the knowledge on functional nanomaterials for possible engineering applications.

Considerable effort has been made to evaluate the technological improvement required to achieve global emission levels that are estimated to be needed to prevent the most serious impacts of climate change. While these analyses have highlighted the magnitude of technological change needed to meet target emission levels, the rate of such change has not been discussed as frequently. Application of the simple yet informative Kaya Identity, which relates emission levels to social and technological drivers, can be applied to gain insights into the required rate of technological change. This analysis shows that the current rate of technological improvement, as measured by the rate of change in energy intensity of economic growth (energy/dollar of GDP) and carbon intensity [carbon dioxide (CO2) emissions per unit energy], must be accelerated to reduce atmospheric CO2 levels to levels estimated to be needed to avoid serious climate impacts, even if population and economic activity were to remain constant. Given projected population growth and desired economic growth, the rate of technological change must accelerate by a factor of 5–8 times current levels and maintain that level of change for the foreseeable future. Such an accelerated pace of technological change has substantial implications for energy technology development, the need for technical expertise, and potentially the structure of the economy as a whole.

Abstract This paper addresses in-process monitoring of part-to-part gap and weld penetration depth using photodiode-based signals during Remote Laser Welding (RLW) of battery tab connectors. Photodiode-based monitoring has been largely implemented for structural welds due to its relatively low cost and ease of automation. However, the application of photodiode-based monitoring to RLW of thin foils of dissimilar metals for battery tab connectors remains an unexplored area of research and will be addressed in this paper. Motivated by the high variability during the welding process of thin foils of dissimilar metals, this paper aims to evaluate the photodiode-based signals to determine if variations in weld quality can be isolated and diagnosed. The main focus is in diagnosing defective weld conditions caused by part-to-part gap variations and/or excessive weld penetration depth. Photodiode-based signals have been collected during RLW of copper-to-steel thin foils lap joint (Ni-plated copper 300 μm to Ni-plated steel 300 μm). The methodology is based on the evaluation of the energy intensity and scatter level of the signals. The energy intensity gives information about the amount of radiation emitted during the welding process, and the scatter level is associated to the accumulated and un-controlled variations. Findings indicated that part-to-part gap variations can be diagnosed by observing the step-change in the plasma signal, with no significant contribution given by the back-reflection. Results further suggested that over-penetration corresponds to significant increment of the scatter level in the sensor signals. Opportunities for automatic isolation and diagnosis of defective welds based on supervised machine learning will be discussed throughout the paper.

Blade-to-blade interactions in a low-pressure turbine were investigated using highly resolved compressible large eddy simulations. For a realistic setup, a stator and rotor configuration with profiles typical of low-pressure turbines was used. Simulations were conducted with an in-house solver varying the gap size between stator and rotor from 21.5% to 43% rotor chord. To investigate the effect of the gap size on the prevailing loss mechanisms, a loss breakdown was conducted. It was found that in the large gap size case, the turbulence kinetic energy levels of the stator wake close to the rotor leading edge were only one third of those in the small gap case, due to the longer distance of constant area mixing. The small time averaged suction side separation on the blade, found in the large gap case, disappeared in the small gap calculations, confirming how stronger wakes can keep the boundary layer attached. The higher intensity wake impinging on the blade, however, did not affect the time averaged losses calculated using the control volume approach of Denton. On the other hand, losses computed by taking cross sections upstream and downstream of the blade revealed a greater distortion loss generated by the stator wakes in the small gap case. Despite the suction side separation suppression, the small gap case gave higher losses overall due to the incoming wake turbulent kinetic energy amplification along the blade passage.

This paper presents a mathematical modeling of a modified voice coil generator, which consists of a moving coil within a fixed magnetic circuit. The simulation has been done with Comsol Multiphysics software, which is a powerful tool to demonstrate the pattern of magnetic field and calculate the induced current in the coil. In our simulations, the magnetic circuit consists of the magnetic conductor and the air gap. In this analysis, the magnetic flux density and the magnetic field intensity are calculated. Moreover, through calculation of the total reluctance of the magnetic circuit and employing the ohm’s law for magnetic circuits, the effect of the length and cross section of the total circuit on the magnetic flux are investigated. Finally, a pattern for the magnetic flux density are demonstrated and the simulation result indicates that the magnetic field is well concentrated on the coil area, therefore this prototype can capture and convert most of the kinetic energy to electricity. A prototype has been fabricated and tested on the shaker. The experimental results indicate that this setup is able to produce the maximum voltage of 0.326 V and the peak power equal to 2.605 mW in 35 Hz frequency and 1 mm peak to peak amplitude.

In the past decade, optical microcavity whispering-gallery mode (WGM) resonators have received increasing attention for applications in optical communications and nanotechnology. In this paper, the theory for describing radiation transfer and heat transfer in the micro/nanoscale devices is presented first. Then the characteristics of waveguide-microdisk coupling WGM miniature resonators are numerically studied. Focus is placed on the parametric studies over a broad range of resonator configuration parameters including the microcavity size and the gap separating the microdisk and waveguide. The finite element method is used for solving Maxwell’s equations which govern the propagation of electromagnetic field and the radiation energy transport in the micro/nanoscale devices. The EM field and the radiation energy distributions are obtained and compared between the on-resonance and off-resonance cases. A very brilliant ring with strong EM field and high radiation intensity is found inward the periphery of the microdisk under resonances and high energy storage is achieved. The microdisk size affects significantly the resonant frequencies and their intervals. The scattering spectra for three different microcavity sizes are obtained. The gap obviously influences the qualify factor, the full width at half maximum, and the finesse of the resonant modes as well as the capability of energy storage.

The computational fluid dynamics code FLUENT has been used to analyze turbulent fluid flow over pebbles in a pebble bed modular reactor. The objective of the analysis is to evaluate the capability of the various RANS turbulence models to predict mean velocities, turbulent kinetic energy, and turbulence intensity inside the bed. The code was run using three RANS turbulence models: standard k-ε, standard k-ω and the Reynolds stress turbulence models at turbulent Reynolds numbers, corresponding to normal operation of the reactor. For the k-ε turbulence model, the analyses were performed at a range of Reynolds numbers between 1300 and 22 000 based on the approach velocity and the sphere diameter of 6 cm. Predictions of the mean velocities, turbulent kinetic energy, and turbulence intensity for the three models are compared at the Reynolds number of 5500 for all the RANS models analyzed. A unit-cell approach is used and the fluid flow domain consists of three unit cells. The packing of the pebbles is an orthorhombic arrangement consisting of seven layers of pebbles with the mean flow parallel to the z-axis. For each Reynolds number analyzed, the velocity is observed to accelerate to twice the inlet velocity within the pebble bed. From the velocity contours, it can be seen that the flow appears to have reached an asymptotic behavior by the end of the first unit cell. The velocity vectors for the standard k-ε and the Reynolds stress model show similar patterns for the Reynolds number analyzed. For the standard k-ω, the vectors are different from the other two. Secondary flow structures are observed for the standard k-ω after the flow passes through the gap between spheres. This feature is not observable in the case of both the standard k-ε and the RSM. Analysis of the turbulent kinetic energy contours shows that there is higher turbulence kinetic energy near the inlet than inside the bed. As the Reynolds number increases, kinetic energy inside the bed increases. The turbulent kinetic energy values obtained for the standard k-ε and the RSM are similar, showing maximum turbulence kinetic energy of 7.5 m2·s−2, whereas the standard k-ω shows a maximum of about 20 m2·s−2. Another observation is that the turbulence intensity is spread throughout the flow domain for the k-ε and RSM whereas for the k-ω, the intensity is concentrated at the front of the second sphere. Preliminary analysis performed for the pressure drop using the standard k-ε model for various velocities show that the dependence of pressure on velocity varies as V1.76.

Intensive efforts have been put into the use of gold nanoparticles (GNPs) for the enhancement of hyperthermia using laser in recent years since the groundbreaking work of Hirsh et al.(1) using gold nanoshells (GNS). Both in vitro (2), and in vivo (3) studies show promising results. For example, GNS, a special kind of GNP, are being manufactured and are in clinical trials (Nanospectra Bioscience, Inc). While the data is compelling, unfortunately the fundamentals of GNP heating are not entirely understood. For example, there are large discrepancies in the experimentally measured photothermal efficiency of GNPs (4, 5). Furthermore, lumped models of GNP heating in solution, by using small volume of GNP solution (4, 5), or stirring the solution (6), neglecting the variation of heat absorption throughout a system require improvement. In reality, the GNPs will attenuate the laser beam as it passes through the GNP host medium. GNPs at different locations will absorb different amount of laser energy and hence have different heat generation.

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%.