Academic literature on the topic 'Global market assessment'

Price policy instruments are common political measures to influence the supply and export of agricultural products. Different price policies have thus different influence on national agricultural markets. These policies can also influence the world market and third countries provided that the exporting country places a high share of its production on the world market. Using a Cobb-Douglas market model we quantitatively assess global implications of national price policies in the EU-27, Russia, and the US (as leading wheat exporting countries) on the world market price for wheat and on welfare, foreign exchange, and producer surplus in third countries. The results prove that increasing protectionist price policies in the EU-27, Russia, and the US would only slightly influence the welfare in third countries. This policy would however bring about a higher decrease of foreign exchange and producer surplus in third countries.

Research background: Natural gas markets are facing an ongoing process of diffusion of natural gas liquefaction (LNG) technology. High mobility and relative ease of LNG use predetermine a huge potential for globalization of gas markets and the formation of a single price space similar to the oil world market. Purpose of the article: The purpose of the article is determining the degree of gas markets convergence and offering an assessment of the prospects for gas globalization. Methods: The authors conducted a comparative analysis of statistics on historical prices in the gas markets, reviewed the scientific and practice-oriented literature on this topic. The authors developed a brief forecast model based on statistical methods to develop their own assessment of the prospects for the development of a single global gas market. Findings & Value added: The paper contains the most relevant comparative assessments of the three key gas markets (Europe, Asia, USA) and descripts an authors’ assessment of the potential for the emergence of a global gas market. On the one hand, the authors revealed a fairly high correlation between LNG prices worldwide, on the other hand, LNG supplies are not the only form of gas supplies. In addition, regional pricing features lead to the relative independence of the three markets among themselves. Moreover, the current global crisis may slow down the development of global gas market due to restrictions on the profitability of potentially new LNG projects.

Previous approaches to portfolio analysis in international markets focused on the country as the basic portfolio unit and relied on an assessment of market attractiveness and competitive strength to determine how to allocate resources. This article proposes an approach to international portfolio analysis based on an examination of the interconnectedness of geographic markets and product businesses. This enables management to identify strategic portfolio units (SPUs) based on market interconnectedness, as well as competitive strength, and market attractiveness. SPUs incorporating market interconnectedness enable management to establish directions for future growth and determine how expansion or retraction of the portfolio in a given direction impacts other portfolio units. Opportunities to leverage core competencies across portfolio units in international markets and to reconfigure portfolio units and operations so as to achieve greater synergies can also be identified.

This study presents the status of the burgeoning global halal market, challenges it faces, and opportunities available for stakeholders. The study is based on primary and secondary research, and found that the US$2.1trillion halal market is projected to reach US $3 trillion by the end of 2023 at a compound annual growth rate of 6.11 per cent. The present market size will more than double if Islamic financing is brought under the ambit of the halal market. Though the uncharted territory has a lot of potential to be tapped, it is also afflicted with multifaceted challenges such asa lack of global consensus (ijama).It is recommended that a harmonized system (HS)code-like mechanism be adopted to capture trade figures of products that conform to halal principles.

Both experienced and novice international business practitioners may need to examine many country ranking reports on a frequent basis. Most of these reports focus on certain socio-economic variables and compute country rankings with a weighted average method, which does not distinguish between likely causes (i.e. inputs) and consequences (i.e. outputs). Through data envelopment window analysis (DEWA), the publicly accessible globalEDGE™ data were employed to compute the relative efficiency index for 22 countries from 2002 to 2009. Subsequently, the trend (averages) and the consistency (correlations) of relative country efficiency along the passage of years were examined to segment those countries into three groups: the “consistent performers,” the “sliding performers,” and the “improving performers” groups. This segmentation scheme may facilitate business practitioners when they develop their global expansion strategy. This paper introduces a complementary yet different longitudinal efficiency which could help multinational corporations’ top management teams and government decision makers evaluate the continuous performance of output/input efficiency.

Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management; and, (S.M.)--Massachusetts Institute of Technology, Engineering Systems Division; in conjunction with the Leaders for Global Operations Program at MIT, 2013.
Cataloged from PDF version of thesis. Vita.
Includes bibliographical references (p. 69-70).
.Amgen is attempting to increase the impact that its products make in people's lives. To meet this goal, the company is aggressively working to reach more patients through growth opportunities in international markets and expects to significantly increase its existing footprint and product impact over the next several years. While the current market entry practices for emerging markets are meeting Amgen's needs, rapid expansion poses significant challenges. This thesis explores two primary aspects, the investigation of improvement opportunities in the commercialization of emerging markets and the development of a risk assessment model applicable to new market commercial entry. Both aspects relate to the larger problem of rapid international expansion and support its resolution in different forms. The assessment of improvement opportunities for emerging market commercialization strives to develop a tangible set of actions the organization can take forth in order to enhance the planning and execution of new market entry. The analysis is accomplished through an in depth study to determine the current level performance for commercial market entry. Based on the current state determination, a future vision is established which incorporates fundamental principles of operational excellence methodologies, integrating various techniques to develop a cohesive approach for improving current entry practices. An improvement roadmap is developed, detailing out specific actions, utilizing a phased implementation approach that allows for making incremental improvements. The risk assessment model establishes a tool the organization can utilize in order to properly identify risk associated with emerging market entry and enhance the decision making process that occurs at a senior leadership level as to whether or not a country should be entered. A scenario based evaluation methodology integrates cross-functional expertise across the organization assimilating information that is normally isolated to a small group within the company. The model determines risk levels for each scenario, generates a risk report and an output review is conducted with subject matter experts (SME) and functional leads. Scenarios that potentially require remediation are reviewed in a detailed risk assessment and resolved as necessary. Any substantial cost associated with control efforts are incorporated into the financial analysis for the target launch country, providing a better depiction of cost versus reward. Thus, the model increases the firm's ability to make agile risk-informed market entry decisions while providing a standardized method that is scalable cross-regionally.
by Seth Brian White.
S.M.
M.B.A.

The object of this research was to develop an international market screening methodology which selects highly attractive markets, allowing for the ranges in diversity amongst organisations, countries and products. Conventional business thought is that, every two to five years, dynamic organisations which conduct business internationally should decide which additional foreign market or markets to next enter. If they are internationally inexperienced, this will be their first market; if they are experienced, it might be, say, their 100th market. How should each organisation select their next international market? One previous attempt has been made to quantitatively test which decision variables, and what weights, should be used when choosing between the 230 countries of the world. The literature indicate that a well-informed selection decision could consider over 150 variables that measure aspects of each foreign market's economic, political, legal, cultural, technical and physical environments. Additionally, attributes of the organisation have not been considered when selecting the most attractive short-list of markets. The findings presented in the dissertation are that 30 criteria accounted for 95 per cent of variance at cross-classification rates of 95 per cent. The weights of each variable, and the markets selected statistically as being the most attractive, were found to vary with the capabilities, goals and values of the organisation. This frequently means that different countries will be best for different organisations selling the same product. A

Thesis (MScAgric)--University of Stellenbosch, 2007.
ENGLISH ABSTRACT: The declaration of Namibia’s independence from South Africa in 1990 has seen the Namibian government aim to plan and implement development programmes that enhance a growing agricultural sector. The new government is facing challenges regarding the addressing of inequalities of income and the allocation and distribution of resources, which have resulted in implementation of the land reform programmes. On the international front, Namibia is a member country of various trade arrangements, such as the WTO, the SADC and SACU. The main driving force behind Namibia’s joining the international communities chiefly has been market access and trade policy reforms. The country’s agricultural sector, in particular the horticultural industry, in regards to table grape production, has been significantly affected by both domestic and regional policies, as well as by the WTO rules. The aim of this study is to determine the environmental factors that create a competitive advantage for the Namibian table grape industry in the international market. A detailed supply-chain analysis, augmented by Porter’s ‘diamond’ model, is used in this study to assess the determinants of the competitiveness of fresh table grapes. Interviews were conducted in informal, semi-structured questions. The questionnaires were mailed to several producers within the table grape-growing industry. Secondary information was obtained from reports, articles and research publications, among other sources. An expert assessment was used to verify information based on the reference methods. Consultations took place in the form of office visits and, in some cases, telephone interviews were held with different experts. The finding of the study shows that Namibia can supply the European markets during the northern hemisphere off-season with quality fresh table grapes. However, industry growth in the European Union (EU) market is constrained by limited free import quotas and high tariffs, specifically as regards seeded fresh table grapes, which are not exempt from such duties. Such constraints are in place despite Namibia’s meeting of international set quality standards, such as EUREPGAP. Moreover, there is potential for increasing supplies to the regional and Asian markets as well as the US market albeit to the lesser extent. Finally, Namibian fresh table grapes profitability is significantly affected by the high production and transaction costs incurred, as well as by the decline in business and the depreciation of the US Dollar against the Namibian Dollar. The study makes the general recommendation that producers should significantly reduce their transaction costs within the chain, by means of vertical co-ordination and integration.
AFRIKAANSE OPSOMMING: Met die verklaring van Namibië se onafhanklikheid van Suid-Afrika in 1990 het die Namibiese regering hulle dit ten doel gestel om ontwikkelingsprogramme te beplan en in werking te stel ten einde daardie land se groeiende landbousektor te versterk. Die nuwe regering moet tans uitdagings met betrekking tot inkomsteongelykhede en die toekenning en verspreiding van hulpbronne die hoof bied wat tot die inwerkingstelling van grondhervormingsprogramme aanleiding gegee het. Internasionaal is Namibië 'n lidland van verskeie handelsreëlings soos die Wêreldhandelsorganisasie (WHO), die Suider-Afrikaanse Ontwikkelingsgemeenskap (SAOG) en die Suider-Afrikaanse Doeane-unie (SADU). Die twee hooffaktore wat daartoe gelei het dat Namibië hom by die internasionale gemeenskappe skaar, is marktoegang en handelsbeleidhervormings. Die land se landbousektor, in besonder die tuinboukundige bedryf met die klem op tafeldruifproduksie, is aansienlik deur binnelandse en streeksbeleid asook deur die WHO-reëls geraak. Die doel van hierdie studie is om die omgewingsfaktore te bepaal wat in die internasionale mark aan die Namibiese tafeldruifbedryf 'n mededingende voordeel gee. Derhalwe gebruik die navorser 'n gedetailleerde aanvoerkettingontleding, ondersteun deur Porter se “diamantmodel”, om die beslissende faktore vir die mededingendheid van vars tafeldruiwe te evalueer. Onderhoude is met behulp van informele, semigestruktureerde vrae gevoer. Die vraelyste is aan verskeie produsente op die gebied van tafeldruifboerdery gepos. Sekondêre inligting is ook onder andere uit verslae, artikels en navorsingspublikasies verkry. Met behulp van 'n kundige evaluering is inligting op grond van die verwysingsmetodes geverifieer. Oorlegpleging met verskeie kundiges het in die vorm van kantoorbesoeke en in sommige gevalle deur middel van telefoononderhoude plaasgevind. Die studiebevinding toon dat Namibië die Europese markte gedurende die noordelike halfrond se tussenseisoen van gehalte- vars tafeldruiwe kan voorsien. Die uitbreiding van die bedryf in die Europese Unie (EU-) mark word egter deur beperkte gratis invoerkwotas en hoë tariewe aan bande gelê, in besonder met betrekking tot pitlose, vars tafeldruiwe wat nie van invoerbelasting vrygestel is nie. Hierdie beperkinge word opgelê ten spyte daarvan dat Namibië aan vasgestelde internasionale gehaltestandaarde soos EUREPGAP voldoen. Die moontlikheid bestaan boonop om lewering aan die streeks- en Asiatiese markte asook die VS-mark te verhoog, hoewel in 'n mindere mate. Laastens word die winsgewendheid van Namibiese vars tafeldruiwe beduidend deur hoë produksie- en transaksiekoste, asook deur die afname in sake en die waardevermindering van die Amerikaanse teenoor die Namibiese dollar geraak. Die studie maak die algemene aanbeveling dat produsente hulle transaksiekoste binne die ketting aansienlik met behulp van vertikale koördinering en integrasie moet verminder.

Thesis (S.M.)--Harvard-MIT Division of Health Sciences and Technology, 2009.
Cataloged from PDF version of thesis.
Includes bibliographical references (p. 51-58).
It has become increasingly important for companies in the biopharmaceutical industry to maximize the clinical, commercial and economic impact of their products on a global scale. In this context, both Western and Asian firms have been engaging in international merger and acquisition (M&A) activities to improve global capabilities and competiveness. The M&A activities in the sector are driven by near-term expiration of blockbuster drug patents and marketplace pricing constraints, resulting in a perceived need to attain improved economies of scale. Across the industry, one can see an increased emphasis on biotechnology medicines (or biologics). Recent large business deals that have seen Pfizer acquire Wyeth, Merck acquire Schering-Plough and Roche complete the acquisition of Genentech all have some element of positioning around the exploitation of biologics for future growth. These trends are thought to put pressure on medium-/small-sized R&D firms to come up with competitive strategies in the global biologics market. Furthermore, the biologics market faces the threat of biosimilars (biogenerics or follow-on biologics). With the advent of expected changes in the US government healthcare policy, a number of companies will be facing competition from biosimilars in the near term. Mitigating the impact of the threat of biosimilars, to some extent, is the fact that manufacturing of most non-vaccine biologics is challenging because of the structural and biological complexity of the commercial product as well as the significant differences in the manufacturing process from one product to the next. Technical capacity and the ability to respond to shifting demands are likely to be one of the critical determinants for the success of individual companies in the biologics (and biosimilars) market. To meet the perceived needs, companies have either expanded their manufacturing capacity and capabilities by building inhouse facilities or by striking long-term supply deals through contract manufacturing organizations (CMOs). Utilizing highly efficient and cost-effective overseas biologics, CMOs could be a value-added business model for Western participants. The most dramatic cost-saving strategy would likely result from outsourcing operations to firms in emerging Asian countries like India and China. However, intellectual property protection and quality control issues have been considered problematic in these countries. In this context, other relatively well developed Asian countries-Japan, South Korea (referred to as Korea) and Singapore, which have relatively strong intellectual property protection and sophisticated manufacturing environments, might be strategic partners for Western firms in the contract biomanufacturing markets. In this research study, the current biopharmaceutical industry trends and global strategies of companies in Japan, Korea and Singapore were explored. As a sub-segment of the biopharmaceutical industry, the geographical features and defining characteristics of the biologics CMO market were examined. The framework for analysis was based on an assessment of the key contributing factors: capacity, capital and cost. The potential capabilities among emerging Asian participants in the global biologics CMO markets were assessed through personal interviews with senior/executive corporate managers of Asian domestic biopharmaceutical companies (principally Japanese and Korean firms). As the results indicate, the biopharmaceutical industry of each country has been influenced both by corporate strategy and government policy. The quantitative analyses show that the current biologics CMO market in these countries is underdeveloped with a few existing participants focusing on high-tech biomanufacturing of commercial products. In addition, the macro-and micro-environment of the biotechnology industry in these countries appears to be unfavorable for the development of a global biologics CMO market. Through individual interviews, it was found that biopharmaceutical corporate managers believe that the opportunities for growth/development of an Asian emerging CMO at the global level are modest, expressing the view that their direct presence in the biologics markets as global-scale CMO participants was unlikely to take place because of financial concerns (high risk investment and profit margin sharing), absence of a global network (no proven track record) and existence of an R&D-intensive corporate culture. In conclusion, while the capabilities of large and established domestic biopharmaceutical firms in these Asian countries certainly can meet regulatory, legal and technical requirements as emerging global CMO participants, the possibilities for development of a global CMO capability in these countries are likely to be small. Strategic considerations for the possible/likely development paths of the CMO market in these Asian countries are provided.
by Soo Jin Chun.
S.M.

This thesis draws on David Harvey’s concept of “accumulation by dispossession” and an international political economy (IPE) approach centred on the institutional arrangements and power structures that privilege certain actors and values, in order to critique current capitalist practices of primitive accumulation by the global corporate extractive industry. The thesis examines how accumulation by dispossession by the global extractive industry is facilitated by the “free entry” or “free mining” principle. It does so by focusing on Canada as a leader in the global extractive industry and the spread of this country’s mining laws to other countries – in other words, the transnationalisation of norms in the global extractive industry – so as to maintain a consistent and familiar operating environment for Canadian extractive companies. The transnationalisation of norms is further promoted by key international institutions such as the World Bank, which is also the world’s largest development lender and also plays a key role in shaping the regulations that govern natural resource extraction. The thesis briefly investigates some Canadian examples of resource extraction projects, in order to demonstrate the weaknesses of Canadian mining laws, particularly the lack of protection of landowners’ rights under the free entry system and the subsequent need for “free, prior and informed consent” (FPIC). The thesis also considers some of the challenges to the adoption and implementation of the right to FPIC. These challenges include embedded institutional structures like the free entry mining system, international political economy (IPE) as shaped by international institutions and powerful corporations, as well as concerns regarding ‘local’ power structures or the legitimacy of representatives of communities affected by extractive projects. The thesis concludes that in order for Canada to be truly recognized as a leader in the global extractive industry, it must establish legal norms domestically to ensure that Canadian mining companies and residents can be held accountable when there is evidence of environmental and/or human rights violations associated with the activities of Canadian mining companies abroad. The thesis also concludes that Canada needs to address underlying structural issues such as the free entry mining system and implement FPIC, in order to curb “accumulation by dispossession” by the extractive industry, both domestically and abroad.

Heineken to remain competitive and one of the top leaders in the beer industry, needs to have the correct products and in some markets even diversify by entering into adjacent categories. Looking for opportunities that were not part of their core business to remain relevant in the eyes of the consumers. Thus, the importance of having a methodology to be able to find opportunities within beer and adjacent categories. For this reason, the Where to Play framework (WTP) was born. This paper explores how Heineken EE&GDF employees utilize the WTP framework, only Operating Company (OpCo) within Heineken that does not brew beer by themselves and that has a global distribution network. For such, a qualitative thematic analysis was conducted. After analysing nine face-to-face interviews and secondary data, the following themes emerged: guidance in the decision-making process, multi-category vision, opportunities in the market, right to win, and market data collection. The study allows understanding the role of the WTP in this OpCo, main advantages, strengths, limitations, and layers of information missing to achieve its maximum potential. As a result, the WTP framework proves to be very effective in allowing employees to embrace the new multi-category vision of Heineken. It is the main source of guidance for assessing the market, defining category and portfolio plans, and for planning short and long-term strategies. Finally, through this framework, Heineken EE&GDF is building a strong collection of market data. Allowing employees to identify and react faster when opportunities in the market emerge.
Para permanecer competitiva e uma das principais líderes da indústria de cerveja, Heineken precisa ter os produtos corretos e, em alguns mercados, até diversificar, entrando em categorias adjacentes e procurando oportunidades que não faziam parte do seu negócio principal. A fim de permanecer relevante aos olhos dos consumidores. Assim, a importância de se ter uma metodologia para encontrar oportunidades nas cervejas e nas categorias adjacentes. Por esse motivo, a estrutura Where to Play (WTP) nasceu. Este artigo explora como os funcionários da Heineken EE&GDF utilizam a estrutura WTP, apenas a OpCo dentro da própria Heineken que não fabrica cerveja por conta própria e que possui uma rede de distribuição global. Para tanto, foi realizada uma análise temática qualitativa. Após a análise de nove entrevistas presenciais e dados secundários, emergiram os seguintes temas: orientação no processo de tomada de decisão, visão de múltiplas categorias, oportunidades no mercado, direito à vitória e coleta de dados de mercado. O estudo permite entender o papel da WTP neste OpCo, principais vantagens, pontos fortes, limitações e camadas de informações ausentes para atingir seu potencial máximo. Como resultado, a estrutura WTP mostra-se muito eficaz ao permitir que os funcionários adotem a nova visão em várias categorias da Heineken. É a principal fonte de orientação para avaliar o mercado, definir planos de categoria e portfólio e planejar estratégias de curto e longo prazo. Finalmente, por meio dessa estrutura, a Heineken EE & GDF está construindo uma forte coleção de dados de mercado. Permitindo que os funcionários identifiquem e reajam mais rapidamente quando surgirem oportunidades no mercado.

The subsequent report is aimed at describing the group project conducted under the Management Consulting Field Labs initiative. It consisted of, as the name indicates, a consulting project completed by four NOVA SBE’s students for the Oil and Gas Company Galp energia(Galp)on its Lubricants Export Department(Export Department). The project’s main objective was to develop a global market assessment and redefine Galp’s Lubricants Export Department internalization strategy. In order to respond to the Company’s needs, having in consideration the dimension of the scope, a high level approach was adopted. Furthermore, the close relationship with the client was critical in order to develop a project that matches the Export Department’s specific needs and therefore creating value for the client.

The subsequent report is aimed at describing the group project conducted under the Management Consulting Field Labs initiative. It consisted of, as the name indicates, a consulting project completed by four NOVA SBE’s students for the Oil and Gas Company Galp energia (Galp)on its Lubricants Export Department(Export Department). The project’s main objective was to develop a global market assessment and redefine Galp’s Lubricants Export Department internalization strategy. In order to respond to the Company’s needs having in consideration the dimension of the scope, a high level approach was adopted. Furthermore, the close relationship with the client was critical in order to develop a project that matches the Export Department’s specific needs and therefore creating valuefor the client.

The subsequent report is aimed at describing the group project conducted under the Management Consulting Field Labs initiative. It consisted of, as the name indicates, a consulting project completed by four NOVA SBE’s students for the Oil and Gas Company Galp energia (Galp)on its Lubricants Export Department(Export Department). The project’s main objective was to develop a global market assessment and redefine Galp’s Lubricants Export Department internalization strategy. In order to respond to the Company’s needs, having in consideration the dimension of the scope, a high level approach was adopted. Furthermore, the close relationship with the client was critical in order to develop a project that matches the Export Department’s specific needs and therefore creating value for the client.

AbstractThe focus on expanding the sector coupling and binding the electricity system and end-user sectors like the transport and industry bring attention to environmental trade-offs. Otherwise, unintended environmental impacts could potentially impede the transformation process. Given that, this paper aims to identify and discuss environmental burdens that should require government attention. For that, the approach of coupling Life Cycle Assessment with the electricity market model (ELTRAMOD) is presented. Results show that the large impact on land use occupation as a regional issue requires attention due to diversified permitting mechanisms and eligibility criteria for solar fields among European member states. Metal and ozone depletion bring the challenge that transformation processes need attention on global limits related to finite resources and fugitive losses of anthropogenic substances.

In the conditions of continuing instability and tension in the world economy and the global agri-food market, interaction in the framework of interstate, integration, regional associations and the strengthening of ties come to the fore. The article analyzes and evaluates the agricultural market of the Eurasian Economic Union in terms of its export potential.

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%.