Littérature scientifique sur le sujet « Entry cost shock »

New technologies integrated New Zealand into the international economy after the 1960s. State investment in air services, international telecommunications, and container shipping enhanced access to overseas markets. They prepared the nation for the shock of Britain’s entry into the European Economic Community. Yet state-owned services were not responsive to demand and were often slow to lower the cost of conducting business between New Zealand and the outside world. This paper suggests that the deregulation and privatization of government-owned enterprises after 1984 quickly reduced the cost of distance, accelerating the globalization of New Zealand.

Purpose – The purpose of this paper is to challenge earlier recommendations and explanations regarding companies’ behaviour after an economic shock and analyses worldwide retail companies’ internationalization processes before and after the 2008 crisis. Design/methodology/approach – Drawing on information published between 2003 and 2012, the authors focus on the 2008 crisis and analyse 1,500 different internationalization moves by 109 companies from 26 countries. Findings – The analyses confirm that the pace of retail internationalization increased after the 2008 crisis, that these companies had mainly moved into countries with newly developing economies, and that the entry modes ranged from high-cost entry modes and low-cost strategies. Originality/value – This paper provides an initial indication of retailers’ actual internationalization behaviour in the period considered. Such material has not been available previously as international retailing research has primarily focused on theoretical assumptions. By focusing on the current financial crisis, the authors highlight the problem that researchers investigating various company behaviours face when comparing these to the theoretical expectations. By using a worldwide, multisectorial, and longitudinal retailing sample to illustrate the internationalization process, the authors not only generalize companies’ internationalization behaviour, but also challenge earlier recommendations and explanations regarding their behaviour after an economic shock.

In this paper I develop a dynamic stochastic general equilibrium model of credit frictions in which the production technology provides a U-shaped average cost curve, enabling endogenous solutions for firm size and quantity. Firms weigh the present value of future net revenues against the opportunity cost of staying in business in their entry or exit decisions. I find that credit frictions increase variable investment costs and result in a larger firm size and a smaller number of firms in the steady state. As the economy deviates from the steady state, however, the presence of credit frictions increases fluctuation in the number of firms, raising market entry during an economic upturn and market exit during a downturn. Also, I find that allowing free entry mitigates some of the effects of credit frictions due to macroeconomic fluctuations. In addition to the homogeneous-firm model, I examine the model when firms have heterogeneous access to credit and find that different credit access gives rise to different firm sizes in the steady state. Firms with easier access to credit become larger than those with less access to credit. Heterogeneous credit access also means that these two types of firms will respond differently to a common technology shock.

Optimization of turbofan engine air intake as well as geometry of intake lip, in-let cross-sectional area and its length is a relevant task in optimizing aerodynamic configuration of an aircraft. It is necessary to ensure a smooth entry of air flow into the engine at all modes of its operation and at various aircraft evolutions while minimizing impact on the overall aerodynamic efficiency of the aircraft. Development of engine air intake was once a very long, routine process that could last for months be-fore design completion, followed by expensive tests on determination of air intake performances on the engine test bench and in flight. Today, we can evaluate performances for a large number of air intake options using design software. The use of computational methods does not exclude tests of air intakes but dramatically reduces their quantity, testing costs and allows designers to focus mainly on the best candidates for air intakes avoiding potential surprises such as shock waves or flow separation caused by a shock wave. Optimal design of the air intake includes determining the right balance between the air intake characteristics, structural load and weight. An over-designed air intake will ultimately be overweight and thus more expensive in terms of flight cost. In a well-designed air intake the Mach number should not exceed 1, in order to avoid a sudden change in static pressure, temperature and density, which can lead to potential shock waves and flow separation caused by a shock wave in all areas throughout the flight. The use of computational fluid dynamics al-lows a better understanding of the conditions under which such adverse events occur. Adjacent to this task is the provision of necessary area on the inside of air intake to ensure sufficient noise absorption generated by the engine fan. The article considers evolution of research on the example of air intake of the D-436 engine of the An-148 aircraft.

Subject area Marketing Management, Marketing Strategy and Marketing Communication. Study level/applicability The case is targeted at students of post-graduation and under-graduation programs in Business Administration, specializing in Marketing Management or Marketing Strategy. Case overview Mukesh Ambani’s announcement about the launching of Reliance Jio at the 41st Annual General Meeting (AGM) of Reliance Industries Limited (RIL) in June 2015 sent shock waves in the telecom industry. Everyone, including the customers, competitors and the entire telecom industry, was excited to know whether Reliance Jio would be able to make a dent or fizzle out like a weak firecracker. Was it time for the top players to be worried and pull their socks up or will it be an inconsequential ripple in the ocean? Mukesh Ambani saw the telecom sector from a new viewpoint and proposed a complete set of solution in the form of Reliance Jio SIM card that addressed the different needs of customers through various applications. This has spread rumors of a merger between Idea and Vodafone in India, which can have a huge impact on Reliance Jio and the telecom sector in general. The profitability indicator that was earlier determined as the average revenue per user (ARPU) will continue to dominate. The companies will be scrambling to find different ways to increase the ARPU to maximize the returns. This would also lead to a downsize in the cost in such a way that their operations do not suffer and profitability is also not negatively affected. Expected learning outcomes To better understand the entry strategy of firms in highly volatile business situations. To know about the competitors and their contribution to the operational and strategic changes of a new entrant. To understand the proceedings associated with marketing communication for establishing a product in a highly competitive market. To know about the impact of joining hands with the competitors on a new entrant. Supplementary materials Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes. Subject code CSS 8: Marketing.

Abstract Coal dust explosions are a lethal threat to anyone working in an underground coal mine. Many coal mining countries including Australia and much of Europe already utilize passive barrier explosion suppressant systems but due to differences in ventilation patterns in the United States, simple passive systems such as the bagged barrier are not as cost effective. Active systems are triggered by properties of an explosion, such as pressure, heat, or light, and release or project a suppressant into the environment to suppress an explosion. To deploy an active system, the best sensor and suppressant release location and spacing must be determined; this must account for total system latency and explosive propagation speed. A 10:1 model of a longwall entry system has been developed to study the pressure wave propagation of coal dust explosions and consequent triggering of different suppressants. The scaled model, with its removable stoppings, allows multiple potential propagation pathways for an explosion to be repeatedly tested, different from typical straight shock tunnel tests. The layout also facilitates the placement of sensors and cameras to fully observe and document the tests. The pressure wave characteristics found at crosscuts and corners will aid in the development of active barrier trigger systems and spacing of suppressant release locations.

Multiple mission reuse capability has become extremely important, towards reducing costs of space transportation. Carbon / Carbon (C/C) composites are well proven, functionally, for repeated use in re-entry missions. A re-entry capsule with sphere-cone-flare external shape, currently under realisation, will fly with C/C Thermal Protection System (TPS) in its peak heating region. The biggest challenge in design of such a reusable hot structure TPS is the management of thermo-structural loads. Differential Coefficient of Thermal Expansion (CTE) is the main cause of stress on the structural assembly elements. A set of flexible super alloy attachment brackets have been configured to take care of this differential thermal expansion of various TPS elements. The brackets also have to survive the impact transient load, on splashdown. This load was estimated using explicit non linear Finite Element method by considering the whole structure a rigid body. A separate FE model with actual stiffness of the structural attachments and the hot structure was generated, to predict the stresses caused by the load. In order to demonstrate the margins and survivability of the assembly, as a whole, a water impact test with actual qualification model of the assembly was carried out in a 10 m deep shock tank. The test also helped to validate the prediction. Considering factors such as cost, time and process constraints involved in realising C/C TPS for the test, it was decided to replace the same with an equivalent structure that satisfied all design and functional requirements. The test article was dropped vertically to simulate an impact velocity of 12 m/s and was adequately instrumented with accelerometers and strain gauges. The test results correlate reasonably well with the prediction.

Background Febrile neutropenia (FN) is a common and potentially fatal complication that can occur during intensive chemotherapy in patients with hematologic disorders. Identification of the cause of FN is very difficult due to the poor diagnostic performance of blood cultures. Thus, the standard of care for FN has been a fever-driven approach with the use of broad-spectrum antibiotics, likely resulting in over-treatment, poor cost-effectiveness, and induction of drug-resistance in bacteria. A novel diagnostic method is needed to improve these problems. CD14, one of the surface markers in monocytes/macrophages, is a lipopolysaccharide-binding protein complex receptor. Some recent studies reported that a fragment released into the blood—soluble CD14-subtype (sCD14-ST)—is promising as a new diagnostic biomarker of infection, especially sepsis (Endo S, et al. J Infect Chemother. 2012;18:891-7). However, the utility of this test in FN is unknown. Methods We prospectively examined the diagnostic value of serum sCD14-ST in patients with hematological disorders who developed FN after chemotherapy or hematopoietic cell transplantation between November 2010 and February 2012. Neutropenia was defined as a neutrophil count of less than 500/μL or less than 1,000/μL with an expected decline to less than 500/μL. Fever was defined as an axillary temperature ≥ 37.5 °C based on a single measurement. Serum was collected within the first 72 hours after the onset of FN in all episodes. During some episodes, serum was collected as a control at the onset of fever, or before chemotherapy when the subjects were afebrile, in accordance with the protocol. Serum sCD14-ST was measured by the two-step enzyme-linked immunosorbent assay using recombinant sCD14-ST as the standards (Yaegashi Y, et al. J Infect Chemother. 2005;11:234-8). Patients with FN were classified into the following four groups: fever of unknown origin, local infection, bacteremia without hypotension, or septic shock. Results A total of 43 patients were eligible and 75 febrile episodes were evaluable. The median age of the patients (44% were male) was 45 years (range: 16–65). Seventy-five blood samples were collected within 72 hours after onset of fever (31 from 0–24 hours, 34 from 24–48 hours, and 10 from 48–72 hours), 12 while afebrile before chemotherapy, and 25 at the onset of fever. The corresponding serum sCD14-ST measurements were termed sCD14-ST<72hr, sCD14-STcon, and sCD14-STonset, respectively. The underlying diseases included acute leukemia (56%), myelodysplastic syndrome (9%), non-Hodgkin’s lymphoma (16%) and others (19%). The median neutrophil count at study enrollment was 67/μL (range 0 to 962). The types of treatment prior to study entry included 49 (65%) chemotherapies, one (1%) autologous hematopoietic cell transplant, and 18 (24%) allogeneic hematopoietic cell transplants. The mean sCD14-STonset value (790 pg/ml, range: 364–1582, n=25) was significantly higher than that for sCD14-STcon (436 pg/ml, range: 262–846, n=12) [unpaired t-test, P<0.001]. In 12 patients with control data, sCD14-ST<72hr was significantly higher than sCD14-STcon (paired t-test, P<0.001). In 25 patients with onset data, sCD14-ST<72hr was significantly higher than sCD14-STonset (paired t-test, P<0.047). The median sCD14-ST<72hrwith fever of unknown origin (n=31), local infection (n=27), bacteremia without hypotension (n=9), septic shock (n=5) and others (n=3) was 680 (314–1986) pg/ml, 763 (348–2615), 782 (482–1550), 1359 (493–2115), and 738 (387–1402), respectively. Conclusion Serum levels of sCD14-ST may be a sensitive indicator of the development of FN. Within 72 hours of the onset of FN, serum levels of sCD14-ST appeared to increase. In addition, sCD14-ST might be a useful marker in detecting potentially lethal septic shock. Further prospective research in a large cohort is warranted to determine not only the diagnostic performance of this test but also its clinical utility as a tool for guiding antibiotic use, including the administration, timing and completion of these drugs in FN. Disclosures: Nakamae: Mochida Pharmaceutical Co., LTD.: Research Funding.

La tesi è formata da due capitoli su dinamica della distribuzione delle imprese e shock aggregati. Usando un modello ad imprese eterogenee, la tesi studia le fluttuazioni di ciclo economico dovute a shock alla tecnologia ed ai costi in entrata.
This dissertation collects two essays on firm size dynamics and aggregate shocks. By employing a model with heterogeneous firms, search frictions and endogenous entry/exit we investigate the business cycle dynamics of the firm size distribution by looking at entry cost and technology shocks. The thesis is divided into two chapters.\\ The first chapter explores how an increase in entry costs affects the size of new entrants and the concentration of employment according to firm size, along with its effects on macro-variables such as unemployment and the exit rate. To this aim we use a BVAR model to estimate the response of such variables to an entry cost shock, then we develop a heterogeneous-firm model with search frictions and endogenous entry/exit dynamics calibrated on data from Business Dynamics Statistics (BDS) database to address our empirical results.\\ We find that positive entry cost shocks increase the average size of entrants and move employment shares toward the largest firms. These results reveal the role of entry costs' fluctuations in explaining the dynamics at business cycle horizons of both firm and employment share distributions according to size.\\ The second chapter perturbed the model with a technology shock to replicate the long-run differential of job destruction due to exit between small and large firms and its empirical response to technology shocks (estimated by a BVAR). Contrary to frameworks with \textit{exogenous} exit, the model is able to account for the volatility of exit and the differential of job destruction due to exit between small and large firms conditional to the technology shock. Moreover we find that not only entry but also exit is a viable amplification channel for the response of unemployment to the shock.\\

This chapter reviews the developments in Greece's financial system since the beginning of the crisis. The chapter places them in a broader context by (i) evaluating the long-term performance of Greece's financial system in comparison to other countries, and (ii) reviewing the credit boom-and-bust cycle that Greece has experienced since Euro entry. Risks in the Greek economy remain overly concentrated to those originating them and are not well diversified. By raising the cost of equity capital for firms, this impedes investment. It also drives up corporate leverage, thus making the economy more vulnerable to shocks. These vulnerabilities manifested themselves even before the sovereign crisis hit. Strengthening investor protection, through improvements in the justice system and financial regulation, is an important part of the solution. In the shorter run, the debt overhang problem in the private sector should be addressed. The chapter discusses policy options to achieve these goals.

The WR21 Intercooled and Recuperated (ICR) gas turbine has been developed to meet the future military needs for a fuel efficient, low cost of ownership, high power marine gas turbine. The engine is rated at 25.6MW (ISO) and has an outstanding pedigree derived from its two parent engines, the Rolls-Royce aero RB211 and Trent. Having completed development in February 2000, a 3000 hour endurance test is now underway and a shock test is planned to qualify the engine for entry into service in the Royal Navy, United States Navy and French Navy. The 3000 hour endurance test commenced at DCN Indret, France in January 2001 and is planned to complete April 2002. Shock testing, conducted on the unrefurbished endurance engine, will complete in late 2002. The three Navies have invested considerable time and effort in developing comprehensive running profiles that will thoroughly test the engine to the satisfaction of all parties. The first 1500 - 2000 hours will be conducted with the engine operating in the mechanical drive configuration, with the remaining running simulating the engine driving a conventional constant speed alternator.

There is a wide literature that temporary shocks in real exchange rates and volatility will cause structural breaks in foreign trade. As a result of temporary shocks in real exchange rates, the real exchange rate elasticity of imports decreases. The decrease in the sensitivity of the import volume to real exchange rates and the failure to return to its former levels after the temporary shock is expressed as the hysteresis situation. In case the exchange rates return to their previous levels after the temporary shock, the main dynamic of hysteresis is that the firms exhibit the behavior of staying in the market due to sunk costs. In the study, foreign trade flows in the Turkish economy were analyzed for the period 2003Q1-2021Q2 by using the asymmetry hypothesis in order to test the hysteresis effects. According to the findings obtained from the asymmetry hypothesis, the absence of a decrease in the import volume during the period of depreciation of the domestic currency indicates the existence of the hysteresis effect. The fact that the firms exhibited the behavior of staying in the market in exchange rate depreciation in the Turkish economy means that sunk costs are extremely effective in hysteresis. Based on this information, as a solution to the hysteresis effects in foreign trade flows in the Turkish economy at the point of policymaking, reducing the sunk costs in market entry to reasonable levels and ensuring stability in exchange rates come to the fore as suggestions in terms of hysteresis.

Financial inclusion is strikingly low in emerging economies. In only a few years, financial technologies (fintech) have led to a dramatic expansion in the number of non-traditional credit intermediaries, but the macroeconomic and credit-market implications of this rapid growth of fintech are not known. We build a model with a traditional banking system and endogenous fintech intermediary creation and find that greater fintech entry delivers positive long-term effects on aggregate output and consumption. However, greater entry bolsters aggregate firm financial inclusion only if it stems from lower barriers to accessing fintech credit by smaller, unbanked firms. Decreasing entry costs for fintech intermediaries alone has only marginal effects in the aggregate. While firms that adopt fintech credit are less sensitive to domestic financial shocks and contribute to a reduction in output volatility, greater fintech entry also leads to greater volatility in bank credit, thereby introducing a tradeoff between output volatility and credit-market volatility.

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%.