Добірка наукової літератури з теми "ANTICIPATED PERFORMANCE INDEX"

Now a day’s air pollution is one of the serious problems around the world. Plants can filter the air via-aerial elements particularly through twigs, stems, leaves, etc. Afforestation program is the best way to control the air pollution. Air pollution tolerance index (APTI) is an intrinsic quality of trees to control pollution problems, which is currently of major concern of urban localities. The trees having higher tolerance index rate are tolerant towards air pollution and can be used as a source to control air pollution, where as the trees having less tolerance index can be used as an indicator to know the rate of air pollution. By combining biochemical and aggregate factors the Anticipated Performance Index is prepared, which is also helpful in green belt development. The present review is based on the assessment of APTI and API potential of different plants for mitigating air pollution

This study reports a combination of two indices, air pollution tolerance index (APTI) and anticipated performance index (API) as viable tools for selecting suitable plants for pollution abatement program. Leaf samples of 6 plant species; Mangifera indica, Araucaria heterophylla, Elaeis guineensis, Syzygium malaccense, Acacia auriculiformis, and Chrysophyllum albidium were collected from an industrial and academic areas at Ado-Odo, Ota, Nigeria; during the dry season of January to March 2018. Biochemical parameters; leaf-pH, relative leaf water content, total chlorophyll content, and ascorbic acid content were analyzed to compute the APTI values. Combined APTI, botanical and socioeconomic indices were graded to evaluate the API of the different plant species. The APTI for the species ranged between 4.79 and 10.7, ideal for sensitive species category (APTI < 11), and the plants are classified as bio indicators of air pollution. The API indicates Mangifera indica and Syzygium malaccense (API = 4) as good performers while Chrysophyllum albidum is a moderate performer (API = 3). The three tree species were identified as suitable green belt plants and thus valuable additions to the green belt development plant list in tropical Africa.

Due to industrialization, urbanization and increasing number of vehicles air pollution has turn out to be serious problem today. Now a days particulate matter shows the undesirable effects on plants, animals and human beings also. Tree plantation programme is the best ways to control the air pollution. Most of the plants filter the air by their aerial elements. Vegetation naturally cleanses the atmosphere by absorbing gases and some particulate matters through leaves so they work as sink for air pollution and reduce pollution level in atmosphere. Leaves function as an efficient pollutant trapping device. Air pollution can directly affects plants via leaves or indirectly via soil acidification. Air pollution tolerance index (APTI) is an intrinsic quality of trees to control air pollution problems. The trees higher tolerance index are tolerance towards air pollution and can be used a source to control air pollution. Air pollution tolerance index can be used as an indicator of rate of air pollution. By combining biochemical and aggregate factors the anticipated performance index (API) is prepared which is used as development of green belt. Thus, the assessment of APTI and API potential of different trees are used to control air pollution.

Air pollution is a global environmental issue, and there is an urgent need for sustainable remediation techniques. Thus, phytoremediation has become a popular approach to air pollution remediation. This paper reviewed 28 eco-friendly indigenous plants based on both the air pollution tolerance index (APTI) and anticipated performance index (API), using tolerance level and performance indices to evaluate the potential of most indigenous plant species for air pollution control. The estimated APTI ranged from 4.79 (Syzygium malaccense) to 31.75 (Psidium guajava) among the studied indigenous plants. One of the selected plants is tolerant, and seven (7) are intermediate to air pollution with their APTI in the following order: Psidium guajava (31.75) > Swietenia mahogany (28.08) > Mangifera indica L. (27.97) > Ficus infectoria L. (23.93) > Ficus religiosa L. (21.62) > Zizyphus Oenoplia Mill (20.06) > Azadirachta indica A. Juss. (19.01) > Ficus benghalensis L. (18.65). Additionally, the API value indicated that Mangifera indica L. ranges from best to good performer; Ficus religiosa L. and Azadirachta indica A. Juss. from excellent to moderate performers; and Cassia fistula L. from poor to very poor performer for air pollution remediation. The Pearson correlation shows that there is a positive correlation between API and APTI (R2 = 0.63), and this implies that an increase in APTI increases the API and vice versa. This paper shows that Mangifera indica L., Ficus religiosa L., and Azadirachta indica A. Juss. have good potential for sustainable reduction in air pollution for long-term management and green ecomanagement development.

There is ever increasing problem of air pollution in cities due to urbanization, industrialization, population growth and increased number of vehicles. Plants can play a vital role in mitigation of air pollution in urban areas. The present study was conducted to estimate the Air Pollution Tolerance Index (APTI) and Anticipated Performance Index (API) for 21 different plant species used for green belt development along the roadsides in Islamabad, the capital city of Pakistan. For APTI and API estimation, ascorbic acid, total chlorophyll content, relative water content and pH of leaf extract of selected plant species were measured using standard methods. The results showed that Syzygium cumini L. (jaman), Pterospermum acerifolium (kanak champa) and Alstonia scholaris (devil tree) were the excellent performers. According to API and APTI values, these species were found effective in reducing air pollution and could be effective for green belt development in urban areas. Albezia lebbeck, Melia azedarach, Eucliptus camaldulensis, Dalbergia sissoo, Tamarindus indica, Acacia nilotica L., Callistemon viminalis and Leucaena leucocephala are very poor performers regarding air and noise abatement. These plants are very poor performers and are very sensitive plants to air pollution. These plants can be used as bio-indicators of poor urban air quality.

Anticipated Performance Index (API) is an innovative ecological approach in selecting plant species for reducing air pollution, using Air Pollution Tolerance Index (APTI) and socio-economic parameters. The present study evaluated API of 11 plant species (6 trees and 5 shrubs) for the recommendation of green belt establishment near the national highway expansion region of the Kiratpur-Nerchowk expressway. The scrutiny of the results revealed that the tolerance capacity of plant species along with their performance grade is a justified approach for selecting the most suitable plant species, which can act as sink for air pollution. API on the other hand, can also help to distinguish the sensitive plant species, which can act as bio-monitors. The results showed that among all plant species Leucaena leucocephala and Toona ciliata (API=5) qualify as ‘very good’ performers in green belt development, while Dalbergia sisso (API=4) is a ‘good’ performer. Grewia optiva and Ficus palmata were judged as ‘moderate’ performers (API=3). Whereas, all other remaining investigated trees and shrubs having lesser API values can act as bio-indicators and particularly are very less recommended for green belt establishment. Hence, on the basis of amalgamation of APTI values together with other socio-economic and biological parameters, API significantly is considered as one of the best approaches identified and recommended for long-term refinement of air quality.

In the present study, 23 tree and shrub species were collectively evaluated for air pollution tolerance index (APTI) and anticipated performance index (API) analysis which proves to be a practical approach for maintaining air quality and developing a sink for air pollution control. On the basis of APTI, tree species were classified as sensitive and tolerant with respect to air pollution. The results of the study show M. indica, Eucalyptus and F.benghalensis as best performers and more tolerant species with APTI values above 10.0 and API grade above 4, although lower relative water content (RWC). The species were observed to have high ascorbic acid content which helps in maintaining good chlorophyll levels. More than 75% of species had good RWC. On the other hand, C. indica, Thevetia peruviana and B. variegata were least scorers in analysis which can prove to be good for biomonitoring of air quality in the campus. It was observed that the trees with broad leaves and thick canopy had higher chlorophyll concentration compared to the trees with compound leaves and cone-type canopy. About 35% of the studied plants were classified as moderately tolerant to tolerant and rest as intermediately tolerant which may be a cause concern if the concentration of air pollutants rise. On an average the species studied are considered good for green belt development in and around the DTU campus area.

Many organizations have redesigned their measurement systems to ensure that they reflect their current environment and strategies. Thus, it is extremely important that the responsible manager knows all the strengths and weaknesses of his organization, having all the maturity axes mapped, highlighting his strengths and weaknesses, to anticipate problems, becoming a company with greater potential competitiveness, because the failure is not to ignore the problem, but to ignore it. Given this, when measuring the Maturity Level Index, you can get an overview of the organization, becoming a radar to know the strengths and weaknesses, thus providing a basis for formulating a decision making and strategy to implement actions to improve performance and organizational maturity. The Acatech Industrie 4.0 (AI4MI) + AHP maturity index has the principle of providing companies with a guide for this transformation, based on the assessment of weaknesses or disagreements with the objective in the action plans, thus obtaining a continuous improvement in the evaluated stages, generating knowledge from the data, to transform the company into an agile organization, with quick decision making and adaptation in multiple business scenarios and different areas of the company. This article presents a preliminary discussion on the benefits of this proposed model for analyzing the measurement of the ACATECH + AHP Maturity Level Index, as to its advantages, results, added value.

The pavement prediction model forecasts the future PCI ratings based on pavement category, thickness, traffic, pavement life period and existing PCI rating. Nevertheless, with time and inclusion of newer pavement types, there was a need to adjust the prevailing pavement performance models. In addition to, pavements management systems need to develop new models for newer pavement types as well. Some developed pavement performance models in the earlier for the Road Development Authority (RDA) Sri Lanka is used by the roadway segments to predict the future condition and rehabilitations of its network. The available data collections in the roadway agencies in Sri Lanka was used for the research study and the methodology and the analysis section depended on that data collection. Probably we were given the IRI data collections which were done in southern expressway section in Sri Lanka. Based on that data, the analysis part was done for determine the pavement roughness deterioration curves. With a comparison of the developed models, the most suitable model was taken at 95% confidence level with 0.8009 R2 value. This study displays outcomes about of standardizing the present performance models, and creating unused models for the different asphalt forms within the roadway network in Sri Lanka. A comparison of IRI progression with pavement age and traffic volume is also conducted to see if there are major differences between such models developed in other countries. The anticipated expectations condition of the asphalts is utilized in assessing its outstanding benefit life to disappointment, which is of prompt utilize in prescribing future upkeep and recovery necessities for the arrange. KEYWORDS: International Roughness Index, performance model, flexible pavement, rehabilitation

Artificial intelligence (AI) has become a hot topic for different professions in which geotechnical engineering is no exception. It is anticipated that AI could perform tasks, solve complex problems and make decision by mimicking intelligence or behavioral pattern of humans or any other living entities. Attempts have been made to study and adopt AI technologies in geotechnical engineering. In this paper, a dataset of marine soil in South Korea is re-analyzed using different commonly adopted AI algorithms. The soil’s compressibility is considered as the dependent variable (i.e., to be predicted) while other soil index and physical properties are regarded as the independent variables. The data are split into the training and validation set. While an algorithm learns from the training set, its prediction performance is examined using the validation set. Then, the Bayesian model class approach has been used to explain the potential problem of the use of AI algorithm to predict soil properties. At the end, by using this study as an example, the author discusses from a partitioner’s perspective how AI could affect our professions. In particularly, the question “are we ready for using AI to predict soil properties” is addressed.

Abstract The aim of this work is to develop an analytical technique for characterizing formation damage. The oil reservoir of the East Siberian Yaraktinskoe field suffers from salt and organic scales precipitation leading to skin damage. Besides, injection water has sulfates, which precipitate as gypsum in the near wellbore area of production wells and at bottomhole. Historically pressure build-ups (PBU) were used to characterize the evolution and extent of the damage. The use of PBUs leads to the shut in of production. Additionally PBUs in the reservoir provide conclusive results in no more than 22% cases. Based on inconsistent results from PBUs and their cost in production losses, it was of interest to find a better and preferable technique for formation damage control using existing data. The result of that initiative is analytical technique that provides dimensionless productivity index (Jd) range monitoring over time, Jd range comparison to the technical potential and identification of the performance gap range. By identifying the performance gap range, stimulation actions are ordered reestablishing oil production, productivity index (PI) and Jd. The technique is based on transmissibility (kh/µB or T) model derived from Kamal and Pan study (2010) and reservoir pressure (Pres or P) model. Stochastic part of the technique is provided by T and Pres error functions. The functions are probability distribution functions (PDF) derived from comparison of the modeled T and Pres with well test measured historical values. Using this T and Pres models and historical data of liquid rates and bottomhole pressures (BHP), we can calculate current and historical Jd, Jd drop relative to historical performance or potential and oil rate potential increment with uncertainty margins (10th, 50th and 90th percentile or P10-50-90). The margins are calculated from 10000 stochastic iterations of T and Pres within the PDFs of their error. The technique has enabled to find 14 stimulation candidates during 6 month of use. Overall, 15 stimulations were implemented since one well was stimulated twice. Ten of 14 stimulations increased oil production rate by 4161 bbl/day. Five stimulations were economically unsuccessful due to inappropriate stimulation technology implementation. The technique shows acceptable uncertainty level to make efficient and appropriate decisions for the appropriately chosen stimulation technology. Modeled P50 PIs have good match with more than 85% correlation with well test measured PIs after economically successful stimulation. New analytical technique is presented here, which can be utilized as an automatic process without repeating well tests for routine generation of accurate stimulation plan with numerical assessment of success probability and anticipated oil rate increment uncertainty range. Realization of stimulation potential is simplified to the task of appropriate treatment technology selection and implementation for the candidates from the rating.

Abstract The objective of this work is to optimize the placement of horizontal power water injector (PWI) wells in stratified heterogeneous carbonate reservoir with tar barriers. The key to successful reservoir navigation is a reliable real-time petrophysical analysis that resolves rock quality variations and differentiates tar barriers from lighter hydrocarbon intervals. An integrated workflow has been generated based on logging-while drilling (LWD) triple combo and Nuclear Magnetic Resonance (NMR) logging data for fluid identification, tar characterization and permeability prediction. The workflow has three steps; it starts with the determination of total porosity using density and neutron logs, the calculation of water-filled porosity from resistivity measurements and an additional partitioning of porosity into bound and free fluid volumes using the NMR data. Second, the total and water-filled porosity, the NMR bound fluid and NMR total porosity are used as inputs in a hydrocarbon compositional and viscosity analysis of hydrocarbon-bearing zones for the recognition of tar-bearing and lighter hydrocarbon intervals. Third, in the lighter hydrocarbon intervals, NMR logs are further analyzed using a multi-cutoff spectral analysis to identify microporous and macroporous zones and to calculate the NMR mobility index. The ideal geosteering targets are highly macroporous rocks containing no heavy hydrocarbons. In horizontal wells, the method is validated using formation pressure while drilling (FPWD) measurements. The procedure has been utilized in several wells. The original well path of the first injector was planned to maintain a safe distance above an anticipated tar-bearing zone. Utilizing the new real-time viscosity evaluation, the well was steered closer to the tar zone several feet below the original plan, setting an improved well placement protocol for subsequent injectors. In the water- or lighter hydrocarbon-bearing zones, spectral analysis of NMR logs clearly accentuated micro- and macroporous carbonate intervals. The correlation between pore size and rock quality has been corroborated by FPWD mobility measurements. In one well, an extremely slow NMR relaxation may indicate wettability alteration in a macroporous interval. An integrated real-time evaluation of porosity, fluid saturation, hydrocarbon viscosity and pore size has enhanced well placement in a heterogeneous carbonate formation where tar barriers are also present. The approach increased well performance and substantially improved reservoir understanding.

Research studies confirm that embracing sustainability in product design and manufacturing not only yields environmental improvements, but offers key business benefits. There is an increasing pressure to adopt a more sustainable approach to product design and manufacture. Organizations that are actively engaged in sustainable product design and development cite impressive levels of improvement over their poorer performing peers in product innovation, quality, safety and revenue growth alongside anticipated environmental and energy gains. Sustainability in design and manufacturing has a lot to do with “doing better with less,” and embracing a broader view of product development, and examining full lifecycle of the product and the impact that its design, manufacture, performance and disposal can have across not only on business, but on the environment and society, as well. The process of rethinking a product’s design so that it is more durable contains fewer parts and easily packaged and recycled also drives innovation and quality. The goal of sustainable product design (SPD) is to produce products and/or to provide services, which are sustainable and achieve their required functionality, meet customer requirements and are cost effective. In other words, SPD is about producing superior products and/or services that fulfil traditional criteria as well as sustainability requirements. The requirement to develop sustainable product is one of the key challenges of 21st century. This paper describes a system that identifies sustainability related performance measures for products in terms of: a) Sustainable product design by robust design. b) Sustainable design by quality of service. The first case study is on a laser based measuring instrument which supports the theory of sustainable product by robust design techniques The objective of the robust design study is to find the optimum recommended factor setting for the surface roughness analyser to minimize the variability in the readings. This instrument relies on the spread of the laser light on the work piece to determine surface roughness; therefore, the analyser’s reliability depends primarily on everything involved with the laser and its path. There are a minimum number of parts to achieve this function since the laser can scan over the work piece, substituting functionality in place of additional parts. The use of surface roughness analyser for online measurement of surface finish and continuous online monitoring and control with a feedback provides the robustness in quality and sustainability. The second case study, which is on elevator quality of service, is considered to support the theory of sustainable design by quality of service. This example shows how the design considerations are influenced and closely linked to the quality of service and maintenance. To support the theory of sustainability by quality of service, this case study examines elevator design and maintenance and recommends a new procedure based on Root Couse Analysis resulting in Elevator Condition Index (ECI). ECI is a new procedure and is applied based on original equipment reliability, projected average life cycle of key wear components, number of run cycles since maintenance was last performed on each component, cost of emergency repair vs. cost of maintenance vs. likelihood of failure. It supports service based on prognostics rather than routine service cycles. Sustainable design and manufacturing is possible if we deploy the virtual engineering tools to monitor and service manufacturing machinery so that the sustainable benefits are maintained throughout the product design cycle. The choice of a workplace structure depends on the design of the parts and lot sizes to be manufactured as well as market factors, such as the responsiveness to changes. Designers should be aware of the manufacturing consequences of their decisions because minor design changes during the early stages often prevent major problems later. As a part of product performance evaluation, the use of capability index to maintain process quality can lead to beneficial results.

Abstract The objective of this study is to monitor and forecast how well the casing string can be run during the drilling of the well's particular hole section. The runnability of the casing is measured by the use of a comprehensive index supported by real-time monitoring of multiple features with estimated indicators. The methodology developed by combining geometrical and mechanical calculations provides an assessment of whether the casing can be run without a short landing. This provides more opportunities for adjustments that can be made during drilling itself. In general, the "smoothness" that connects the wellbore geometry and mechanical system is related to the borehole quality utilized to run the casing. With real-time drilling parameters and complex equations represented with common sense, it is possible to assess the runnability of the casing for a given hole size. When taken together, wellbore tortuosity, borehole torsion, wellprofile energy, well curvature passage through force, margin of slack off force and overpull margin support the evaluation of a proposed wellpath to determine the casing's runnability. Combining operational experience and trajectory metrics in a methodology has proven to be effective in assessing operational risk for tasks like running casing in curve construction sections or to total depth on prolonged laterals. In addition, this paper discusses how the runnability metrics can help to anticipate or diagnose other challenges such as complex stimulation work, artificial lift performance and possible well servicing complications that may arise because of unwanted curvature, borehole torsion and wellbore drift. Presently there is no method to predict the runnability of casing to bottom while the well is being drilled. A new and practical method of quantifying the runnability of casing during drilling has been analyzed and proposed in this paper.

Seismic ground failure potential from liquefaction is generally undertaken in three steps. First, a susceptibility evaluation determines if the soil in a particular layer is in a condition where liquefaction triggering could potentially occur. This is followed by a triggering evaluation to estimate the likelihood of triggering given anticipated seismic demands, environmental conditions pertaining to the soil layer (e.g., its depth relative to the ground water table), and the soil state. For soils where triggering can be anticipated, the final step involves assessments of the potential for ground failure and its impact on infrastructure systems. This workshop was dedicated to the first of these steps, which often plays a critical role in delineating risk for soil deposits with high fines contents and clay-silt-sand mixtures of negligible to moderate plasticity. The workshop was hosted at Oregon State University on September 8-9, 2022 and was attended by 49 participants from the research, practice, and regulatory communities. Through pre-workshop polls, extended abstracts, workshop presentations, and workshop breakout discussions, it was demonstrated that leaders in the liquefaction community do not share a common understanding of the term “susceptibility” as applied to liquefaction problems. The primary distinction between alternate views concerns whether environmental conditions and soil state provide relevant information for a susceptibility evaluation, or if susceptibility is a material characteristic. For example, a clean, dry, dense sand in a region of low seismicity is very unlikely to experience triggering of liquefaction and would be considered not susceptible by adherents of a definition that considers environmental conditions and state. The alternative, and recommended, definition focusing on material susceptibility would consider the material as susceptible and would defer consideration of saturation, state, and loading effects to a separate triggering analysis. This material susceptibility definition has the advantage of maintaining a high degree of independence between the parameters considered in the susceptibility and triggering phases of the ground failure analysis. There exist differences between current methods for assessing material susceptibility – the databases include varying amount of test data, the materials considered are distinct (from different regions) and have been tested using different procedures, and the models can be interpreted as providingdifferent outcomes in some cases. The workshop reached a clear consensus that new procedures are needed that are developed using a new research approach. The recommended approach involves assembling a database of information from sites for which in situ test data are available (borings with samples, CPTs), cyclic test data are available from high-quality specimens, and a range of index tests are available for important layers. It is not necessary that the sites have experienced earthquake shaking for which field performance is known, although such information is of interest where available. A considerable amount of data of this type are available from prior research studies and detailed geotechnical investigations for project sites by leading geotechnical consultants. Once assembled and made available, this data would allow for the development of models to predict the probability of material susceptibility given various independent variables (e.g., in-situ tests indices, laboratory index parameters) and the epistemic uncertainty of the predictions. Such studies should be conducted in an open, transparent manner utilizing a shared database, which is a hallmark of the Next Generation Liquefaction (NGL) project.

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%.

Macroeconomic summary Economic activity has recovered faster than projected, and output is now expected to return to pre-pandemic levels earlier than anticipated. Economic growth projections for 2021 and 2022 have been revised upward, though significant downward bias remains. (Graph 1.1). Colombia’s economy returned to recovery in the third quarter after significant supply shocks and a third wave of COVID-19 in the second. Negative shocks affecting mobility and output were absent in the third quarter, and some indicators of economic activity suggest that the rate of recovery in demand, primarily in consumption, outpaced estimates from the July Monetary Policy Report (MPR) in the context of widely expansive monetary policy. Several factors are expected to continue to contribute to output recovery for the rest of the year and into 2022, including the persistence of favorable international financial conditions, an expected improvement in external demand, and an increase in terms of trade. Increasing vaccination rates, the expectation of higher levels of employment and the consequent effect on household income, improved investment performance (which has not yet returned to pre-pandemic levels), and the expected stimulus from monetary policy that would continue to be expansive should also drive economic activity. As a result, output is estimated to have returned to its pre-pandemic level in the third quarter (previously expected in the fourth quarter). Growth is expected to decelerate in 2022, with excess productive capacity projected to close faster than anticipated in the previous report. Given the above, GDP growth projections have been revised upward for 2021 (9.8%, range between 8.4% and 11.2%) and 2022 (4.7%, range between 0.7% and 6.5%). If these estimates are confirmed, output would have grown by 2.3% on average between 2020 and 2022. This figure would be below long-term sustainable growth levels projected prior to the pandemic. The revised growth forecast for 2022 continues to account for a low basis of comparison from this year (reflecting the negative effects of COVID-19 and roadblocks in some parts of the country), and now supposes that estimated consumption levels for the end of 2021 will remain relatively stable in 2022. Investment and net exports are expected to recover at a faster pace than estimated in the previous report. Nevertheless, the downward risks to these estimates remain unusually significant, for several reasons. First, they do not suppose significant negative effects on the economy from possible new waves of COVID-19. Second, because private consumption, which has already surpassed pre-pandemic levels by a large margin, could perform less favorably than estimated in this forecast should it reflect a temporary phenomenon related to suppressed demand as service sectors re-open (e.g. tourism) and private savings accumulated during the pandemic are spent. Third, disruptions to supply chains could be more persistent than contemplated in this report and could continue to affect production costs, with a negative impact on the economy. Finally, the accumulation of macroeconomic imbalances could translate to increased vulnerability to changes in international financial conditions or in international and domestic economic agents’ perception of risk in the Colombian economy, representing a downward risk to growth. A higher-than-expected increase in inflation, the persistence of supply shocks, and reduced excess productive capacity have led to an increase in inflation projections above the target on the forecast horizon (Graph 1.2). Inflation increased above expectations to 4.51% in the third quarter, due in large part to the price behavior of foods and regulated items, and to a lesser extent to core inflation. Increased international prices and costs continue to generate upward pressure on various sub-baskets of the consumer price index (CPI), as has the partial reversion of some price relief measures implemented in 2020 in response to the COVID-19 pandemic.

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

1. Macroeconomic Summary In December, headline inflation (13.1%) and the average of the core inflation measures (10.3%) continued to trend upward, posting higher rates than those estimated by the Central Bank's technical staff and surpassing the market average. Inflation expectations for all terms exceeded the 3.0% target. In that month, every major group in the Consumer Price Index (CPI) registered higher-than-estimated increases, and the diffusion indicators continued to show generalized price hikes. Accumulated exchange rate pressures on prices, indexation to high inflation rates, and several food supply shocks would explain, in part, the acceleration in inflation. All of this is in a context of significant surplus demand, a tight labor market, and inflation expectations at different terms that exceed the 3.0% target. Compared to the October edition of the Monetary Policy Report, the forecast path for headline and core inflation (excluding food and regulated items: EFR) increased (Graphs 1.1 and 1.2), reflecting heightened accumulated exchange rate pressures, price indexation to a higher inflation rate (CPI and the producer price index: PPI), and the rise in labor costs attributed to a larger-than-estimated adjustment in the minimum wage. Nevertheless, headline inflation is expected to begin to ease by early 2023, although from a higher level than had been estimated in October. This would be supported initially by the slowdown forecast for the food CPI due to a high base of comparison, the end anticipated for the shocks that have affected the prices of these products, and the estimated improvement in external and domestic supply in this sector. In turn, the deterioration in real household income because of high inflation and the end of the effects of pent-up demand, plus tighter external and domestic financial conditions would contribute to diluting surplus demand in 2023 and reducing inflation. By the end of 2023, both headline and core (EFR) inflation would reach 8.7% and would be 3.5% and 3.8%, respectively, by December 2024. These forecasts are subject to a great deal of uncertainty, especially concerning the future behavior of international financial conditions, the evolution of the exchange rate, the pace of adjustment in domestic demand, the extent of indexation of nominal contracts, and the decisions taken regarding the domestic price of fuel and electricity. In the third quarter, economic activity surprised again on the upside and the growth projection for 2022 rose to 8.0% (previously 7.9%). However, it declined to 0.2% for 2023 (previously 0.5%). With this, surplus demand continues to be significant and is still expected to weaken during the current year. Annual economic growth in the third quarter (7.1 % SCA)1 was higher than estimated in October (6.4 % SCA), given stronger domestic demand specifically because of higher-than-expected investment. Private consumption fell from the high level witnessed a quarter earlier and net exports registered a more negative contribution than anticipated. For the fourth quarter, economic activity indicators suggest that gross domestic product (GDP) would have remained high and at a level similar to that observed in the third quarter, with an annual variation of 4.1%. Domestic demand would have slowed in annual terms, although at levels that would have remained above those for output, mainly because of considerable private consumption. Investment would have declined slightly to a value like the average observed in 2019. The real trade deficit would have decreased due to a drop in imports that was more pronounced than the estimated decline in exports. On the forecast horizon, consumption is expected to decline from current elevated levels, partly because of tighter domestic financial conditions and a deterioration in real income due to high inflation. Investment would also weaken and return to levels below those seen before the pandemic. In real terms, the trade deficit would narrow due to a lower momentum projection for domestic demand and higher cumulative real depreciation. In sum, economic growth for all of 2022, 2023, and 2024 would stand at 8.0%, 0.2% and 1.0%, respectively (Graph 1.3). Surplus demand remains high (as measured by the output gap) and is expected to decline in 2023 and could turn negative in 2024 (Graph 1.4). Although the macroeconomic forecast includes a marked slowdown in the economy, an even greater adjustment in domestic absorption cannot be ruled out due to the cumulative effects of tighter external and domestic financial conditions, among other reasons. These estimates continue to be subject to a high degree of uncertainty, which is associated with factors such as global political tensions, changes in international interest rates and their effects on external demand, global risk aversion, the effects of the approved tax reform, the possible impact of reforms announced for this year (pension, health, and labor reforms, among others), and future measures regarding hydrocarbon production. In 2022, the current account deficit would have been high (6.3 % of GDP), but it would be corrected significantly in 2023 (to 3.9 % of GDP) given the expected slowdown in domestic demand. Despite favorable terms of trade, the high external imbalance that would occur during 2022 would be largely due to domestic demand growth, cost pressures associated with high freight rates, higher external debt service payments, and good performance in terms of the profits of foreign companies.2 By 2023, the adjustment in domestic demand would be reflected in a smaller current account deficit especially due to fewer imports, a global moderation in prices and cost pressures, and a reduction in profits remitted abroad by companies with foreign direct investment (FDI) focused on the local market. Despite this anticipated correction in the external imbalance, its level as a percentage of GDP would remain high in the context of tight financial conditions. In the world's main economies, inflation forecasts and expectations point to a reduction by 2023, but at levels that still exceed their central banks' targets. The path anticipated for the Federal Reserve (Fed) interest rate increased and the forecast for global growth continues to be moderate. In the fourth quarter of 2022, logistics costs and international prices for some foods, oil and energy declined from elevated levels, bringing downward pressure to bear on global inflation. Meanwhile, the higher cost of financing, the loss of real income due to high levels of global inflation, and the persistence of the war in Ukraine, among other factors, have contributed to the reduction in global economic growth forecasts. In the United States, inflation turned out to be lower than estimated and the members of the Federal Open Market Committee (FOMC) reduced the growth forecast for 2023. Nevertheless, the actual level of inflation in that country, its forecasts, and expectations exceed the target. Also, the labor market remains tight, and fiscal policy is still expansionary. In this environment, the Fed raised the expected path for policy interest rates and, with this, the market average estimates higher levels for 2023 than those forecast in October. In the region's emerging economies, country risk premia declined during the quarter and the currencies of those countries appreciated against the US dollar. Considering all the above, for the current year, the Central Bank's technical staff increased the path estimated for the Fed's interest rate, reduced the forecast for growth in the country's external demand, lowered the expected path of oil prices, and kept the country’s risk premium assumption high, but at somewhat lower levels than those anticipated in the previous Monetary Policy Report. Moreover, accumulated inflationary pressures originating from the behavior of the exchange rate would continue to be important. External financial conditions facing the economy have improved recently and could be associated with a more favorable international context for the Colombian economy. So far this year, there has been a reduction in long-term bond interest rates in the markets of developed countries and an increase in the prices of risky assets, such as stocks. This would be associated with a faster-than-expected reduction in inflation in the United States and Europe, which would allow for a less restrictive course for monetary policy in those regions. In this context, the risks of a global recession have been reduced and the global appetite for risk has increased. Consequently, the risk premium continues to decline, the Colombian peso has appreciated significantly, and TES interest rates have decreased. Should this trend consolidate, exchange rate inflationary pressures could be less than what was incorporated into the macroeconomic forecast. Uncertainty about external forecasts and their impact on the country remains high, given the unpredictable course of the war in Ukraine, geopolitical tensions, local uncertainty, and the extensive financing needs of the Colombian government and the economy. High inflation with forecasts and expectations above 3.0%, coupled with surplus demand and a tight labor market are compatible with a contractionary stance on monetary policy that is conducive to the macroeconomic adjustment needed to mitigate the risk of de-anchoring inflation expectations and to ensure that inflation converges to the target. Compared to the forecasts in the October edition of the Monetary Policy Report, domestic demand has been more dynamic, with a higher observed level of output exceeding the productive capacity of the economy. In this context of surplus demand, headline and core inflation continued to trend upward and posted surprising increases. Observed and expected international interest rates increased, the country’s risk premia lessened (but remains at high levels), and accumulated exchange rate pressures are still significant. The technical staff's inflation forecast for 2023 increased and inflation expectations remain well above 3.0%. All in all, the risk of inflation expectations becoming unanchored persists, which would accentuate the generalized indexation process and push inflation even further away from the target. This macroeconomic context requires consolidating a contractionary monetary policy stance that aims to meet the inflation target within the forecast horizon and bring the economy's output to levels closer to its potential. 1.2 Monetary Policy Decision At its meetings in December 2022 and January 2023, Banco de la República’s Board of Directors (BDBR) agreed to continue the process of normalizing monetary policy. In December, the BDBR decided by a majority vote to increase the monetary policy interest rate by 100 basis points (bps) and in its January meeting by 75 bps, bringing it to 12.75% (Graph 1.5). 1/ Seasonally and calendar adjusted. 2/ In the current account aggregate, the pressures for a higher external deficit come from those companies with FDI that are focused on the domestic market. In contrast, profits in the mining and energy sectors are more than offset by the external revenue they generate through exports. Box 1 - Electricity Rates: Recent Developments and Indexation. Author: Édgar Caicedo García, Pablo Montealegre Moreno and Álex Fernando Pérez Libreros Box 2 - Indicators of Household Indebtedness. Author: Camilo Gómez y Juan Sebastián Mariño

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

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