Academic literature on the topic 'International market assessment'

The implementation of international standards for the bank risk assessment and market risk, in particular, in Ukrainian banking practice is aimed at achieving common standards for regulating banking activities in different countries. This should help to increase the banking sector stability in Ukraine and, accordingly, increase the interest of foreign investors.The article deals with the methodological approaches to assessing the bank market risk (in particular, SA, IMA and R-SbM approaches) recommended by the Basel Committee on Banking Supervision in terms of standardization and unification of the normative framework of capital requirements for Ukrainian banks. Considering the analysis results, it was determined that the choice and implementation of an optimal approach in the context of Ukrainian banking practice can be carried out in one of two alternative scenarios: 1) a simplified version of a sensitivity based method (R-SbM); and 2) a recalibrated version of the Basel II standardized approach. In this case, the Basel II recalibrated version is more acceptable for use by banks, since it is most relevant to volume and complexity of transactions carried out by Ukrainian banks.The obtained results are aimed at improving the existing methodology for calculating the adequacy ratio of banks' regulatory capital (N2), which currently considers only the needs for credit risk coverage, and at refining the methodology in terms of considering banks' market-risk coverage needs.

Conformity assessment activities facilitate market acceptance for manufacturers, importers, exporters and traders by providing confidence that applicable requirements are being met. There is no trade without conformity assessment. There is no competitive market without standards. There is no free movement of goods without harmonisation of requirements and mutual recognition. This article presents state of the art of conformity assessment and tries to look for the future challenges of development of conformity assessment and accreditation. It is still the crucial point that market players develop a common understanding of the requirements that have to be fulfilled. On markets where free movement of goods and services is possible, another challenge is how to obtain the maximum benefits from harmonisation of standards and accredited conformity assessment activities.

The paper presents an approach to assessing insurance market infrastructure entities’ activity that allows identifying gaps and weaknesses and seeking ways of addressing them in the context of revitalization of such emerging insurance markets as Ukrainian. To determine the impact of costs of insurance market infrastructure entities on the financial performance before taxes resulting from insurance activity, the regression formula is used. It demonstrates significant dependence between financial performance before taxes of insurers and costs of accident commissioner services. Based on this, an assessment approach for groups of insurance market infrastructure entities is created. The assessment results suggest that the efficiency of insurance market infrastructure entities in Ukraine is unsatisfactory (135 points out of 390). To develop infrastructure entities of the insurance market in Ukraine, it is expedient to ensure an effective regulatory framework for all insurance infrastructure entities, including registers, reporting, and a requirement to disclose information on their performance.

The main purpose of this investigation is to distinguish the problematic tendencies of the health insurance market development in Ukraine and the competitive positions of the leading insurance companies on it. Accordingly, the issues of complex analysis of key indicators of the insurers’ competitiveness, and the issues of establishing the factors that determine the level of competition in the market become very urgent. The first 30 insurers out of 50 were taken for the study, and they received about 90% of insurance premiums for voluntary health insurance in Ukraine in 2017. The authors have made the assessment of the competitive environment of the health insurance market of Ukraine using the concentration index and the indicator of market competition, which resulted in defining the advantages and disadvantages of their application. Taking into account that the abovementioned indicators for assessing the competition in the insurance market can provide only approximate results, which indicates the inadequacy of the conclusions about the effectiveness of business processes management on it, the authors offered a scientific methodological approach to assessing the market environment with the use of an integrated indicator of the voluntary health insurance market competitiveness. Herewith, such an integrated indicator is calculated in terms of three segments of the market: sickness insurance; voluntary medical insurance (continuous health insurance); medical expenses insurance, simultaneously taking into account the behavior of two indicators – concentration and market competition. As a result of the research, it was found that the highest level of market concentration is typical for sickness insurance and it indicates a high monopoly in the market in terms of this segment. Thus, the integrated indicator allows to make a comprehensive investigation of market behavior of the market participants and to reveal the problematic tendencies of its competitive environment.

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.

Abstract Concern about inequality, particularly inequality of income and wealth, has become prominent in public discourse around the world. This article first discusses issues of measurement and goes on to ask why we should care, emphasizing fairness and the market distortions and negative externalities found in unequal societies. It documents that the decline in global inequality in recent decades has been due to falling inequality between, rather than within, countries. The popular picture of rising inequality in OECD countries is more varied and complex than often perceived. Its drivers include aspects of globalization and of technological change as well as changes in the distribution of market power, in financial markets, public policy, and monetary policy. There are two over-arching questions about how governments can address inequality. The first is what should be tackled at the international level and what should be the preserve of national policy. The second is what should be the balance between pre- and post-market interventions. Both have a role but generally the balance has been too skewed towards the latter.

In this study, a research conducted on to investigate countries’ market potentials for Turkish exporters. The main purpose of this research is to examine the factors that can be used in assessment of the market potential. In the research, the potential of international markets was evaluated by factors of ease of trade, market growth, market size and market accessibility. As a result of the research, China, Germany, India, USA and United Kingdom have been ranked as the top market potential for Turkish exporter companies. In addition, countries were divided into six clusters and those with the highest potentials were identified.

The aim of this article is to identify patterns of profitability volatility and to establish the degree of dynamic conditional correlation between the stock markets of developed countries and those of Russia. This issue is important for investment strategies and the international diversification of investments. We use the BEKK-GARCH, CCC-GARCH, and DCCGARCH models and show that the correlation between the Russian stock market and the markets of the USA, UK, Germany, and France has decreased significantly in recent years. We find that while the correlation between the Russian market and the mature European markets is bidirectional, the relationship between the US market and the Russian market is unidirectional. An assessment of the transfer of volatility from all of the mature markets to the Russian market establishes its statistical significance and shows that feedback from the Russian market to the UK and German markets is insignificant. Diversification of international portfolios in the Russian market is recommended.

The aim of my thesis was to analyze and identify main types of risks and uncertainties, which can be faced by international companies. I also described main ways and methods of avoidance and minimisation of such risky situations. AB Inbev was chosen as an example since I was working in the branch of this company located in Prague, Czech Republic. This explains my concentration mainly on the market for beverages.

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

Abstract

 

Date: May 15, 2009

Course: Master thesis, EFO705

Authors: Hanna Jokiperä 800218-T108, hja08001@student.mdh.se

Ruusa Mustonen 830711-P263, rmn08001@student.mdh.se

Tutor: Tobias Eltebrandt

Title: CAN Europe – Market Research of Sweden

Strategic question: How can CAN Europe launch the internationally standardised vocational skills assessment tests successfully to Sweden? The purpose of this master thesis is to provide the company with comprehensive information about the Swedish market and to suggest ways to implement the launching process.

Research questions:

• What are the characteristics of the Swedish labour and recruitment market?
• Are the Swedish companies interested in using CAN Europe’s tests?
• What would be the suitable marketing mix when entering the Swedish market?

Methods: Besides the comprehensive collection of secondary data, the primary data was collected by the means of an open-ended questionnaire among large companies and recruitment agencies in Sweden. The research was conducted in order to gather in-depth information about the recruitment field in Sweden.

Conceptual Framework: Theories of ‘The International Marketing Task’, ‘The Country Notebook’ and ‘The Market entry plan’ were used.  Theories and concepts were chosen for the purpose that they would support each other and could be used by combining them when making the analysis of the findings.

Conclusion: According to the study, Sweden seems to be highly potential country for CAN Europe to enter since the relevant aspects for successful launch exist in the market i.e. in terms of companies’ interest and needs, and the characteristics of the skills assessment and recruitment market in Sweden.

Key Words: Market entry plan, marketing mix, international launch, market research, skills assessment, recruitment, blue-collar

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.

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.

Charles University in Prague Faculty of Social Sciences Institute of Economic Studies Bibliographic Record of a an Academic Thesis Title in the language of the thesis (as recorded in SIS) Terrorism and market risk assessment Subtitle Translation of the title into English/Czech (as recorded in SIS) Terrorism and market risk assessment Type of the Thesis Master's thesis Author: Bc. Jean Lacroix Year 2015 Advisor of the thesis Mgr Magdalena Patakova Number of pages 77 Awards Specialization Economics (CFS) Abstract in Czech Abstract in English Terrorist attacks are one of the best examples of fast evolving institutional framework. In that context investors are impacted by a lot of pieces of information in a limited period of time. This disturbs the trading behavior and consequently the distribution of returns on the period following the attack (the information was not predicted and directly affects the investment choices). The present thesis focuses on the risk aspect of such disturbances. If terrorist attacks reshape the distribution of returns, it may modify the risk measures (multivariate and univariate). The particularity of the change in distribution implies that the observed translation into financial measures of risk will not be equal among all indicators. First a distinction exists between univariate...

碩士
國立臺北大學
企業管理學系碩士在職專班
107
After entering the global market, the division of international industry has gradually taken shape and individual companies have begun to expand the layout of overseas markets in order to diversify business risks or reduce operating costs. Although Taiwanese companies have spread across the world, investment in overseas markets is still dominated by the relatively familiar Asian market, especially in Mainland China, where there are no language barriers and cultural differences. The ASEAN countries began to rise. The Taiwan government proposed a new southward policy and encouraged Taiwanese SMEs to go to expansion and investment. However, the ethnic culture, geographic location, political maturity, economic and trade development, salary level, and infrastructure construction of each country in the ASEAN countries are different. This is not a easy way that how do Taiwanese SMEs evaluate and select the most suitable ways to enter. We interviewed the management class of different industrial companies through literature reference and semi-structured in-depth interviews to obtain the main considerations for the operating level of the interviewed company to enter the international market (Vietnam), and to explore Cultural Differences and Country of Origin Effects. For the assessment of the impact of entering the international market, the recommendations of the interviewed companies to enter the international market (Vietnam) are summarized after the conclusions.

Abstract This paper presents how Romanian educational strategies are aligned with the policy statements of international organisations for future generations. The research hypothesis is that Romanian higher education institutions (HEI) are not ready to fulfil the needs of future generations. The paper reviews the educational competences of fourteen faculties of public administration and management from nine universities (state and private). The analysis is based on Kolb’s experiential learning cycle elements, and we identified whether educational competences referred directly to them or not. Our findings concentrate on the lack of recognition of experiential learning methods and the gap between the labour market requirements and the educational competences acquired in Romanian HEI. The methodology used to respond to the research questions mixes qualitative (strategies and literature review, structured interviews) and quantitative approaches (assessment of the curricula and information presented in the admission process by Faculties of Public Administration and Management).

AbstractThis chapter summarizes the sources of greenhouse gas (GHG) emissions from different economic sectors in Nigeria and emphasizes those arising from agriculture and forestry. The impacts of climate change on agricultural systems in Nigeria are likely to be large, motivating the need for additional knowledge to assess current practices and formulate appropriate modifications for both mitigation and adaptation. Some current farming practices are believed to be adaptive, but further study would provide better assessments. We also analyzed the trade-offs between household income and GHG emissions at two contrasting sites in northern Nigeria. A farm optimization model maximizing the value of crop, livestock, and tree production activities in a single representative year assessed the potential impacts for GHG reductions of 10% and 25% and the maximum allowable reductions of 26% and 30% on farm activities and income. Emissions reductions of 10% reduced annual household incomes by less than 5% but required substantive changes, especially in livestock owned. Maximum possible GHG emissions reductions (while still meeting minimum household consumption needs) would require marked changes in production pattern and would lower household incomes by 22–44%. We did not assess effects over longer periods, where the role of livestock as a key asset may imply additional negative impacts. Productivity-enhancing technologies that would simultaneously reduce GHG emissions and increase incomes are needed for smallholder farms to play a larger role in climate change mitigation without the burden of reduced incomes and greater risk. This suggests the need for programmatic and policy actions both by national agricultural research systems and the Consultative Group for International Agricultural Research (CGIAR).

This chapter examines a unique set of assessments of securities markets and their regulation, from countries around the world, in order to provide a global perspective on policymakers' viewpoints about the regulation and governance of market infrastructure institutions. The assessments were undertaken as part of an initiative called the Financial Sector Assessment Program (FSAP), implemented jointly by the International Monetary Fund and the World Bank. Each assessment evaluates the extent to which a country's securities markets regulatory regime reflects internationally recognized standards. The assessments prepared for the FSAP since its inception in 1999 up until 2006 are analyzed. Together they provide insights on three topics: how exchanges, central counterparties, and central securities depositories are regulated and governed globally; official perceptions on the optimal way of regulating markets and market infrastructure institutions; and the assumptions that are often made when examining the governance and regulation of market infrastructure institutions.

This project explores workforce and occupations within the highway, street, and bridge construction industries (NAICS 237310) in Indiana. There are five specific deliverable comprised of three data reports, one policy document, and a website. The first data report includes an assessment of the workforce based on the eight-part framework, which are industry, occupations, job postings, hard-to-fill jobs, Classification of Instructional Programs (CIP), GAP Analysis, compatibility, and automation. The report defines a cluster followed by a detailed analysis of the occupations, skills, job postings, etc., in the NAICS 237310 industry in Indiana. The report makes use of specialized labor market databases, such as the Economic Modeling Specialists International (EMSI), CHMURA JobsEQ, etc. The analysis is based only on the jobs covered under the unemployment insurance or the Quarterly Census of Employment and Wages (QCEW) data. The second data report analyzes jobs to jobs flows to and from the construction industry in Indiana, with a particular emphasis on the Great Recession, by utilizing the Bureau of Labor Statistics (BLS) data. The third data report looks into the equal employment opportunity or Section 1391 and 1392 data for Indiana and analyzes specific characteristics of that data. The policy report includes a set of recommendations for workforce development for INDOT and a summary of the three data reports. The key data on occupations within the NAICS 237310 are provided in an interactive website. The website provides a data dashboard for individual INDOT Districts. The policy document recommends steps for development of the highways, streets and bridges construction workforce in INDOT Districts.

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%.