Добірка наукової літератури з теми "Diagnostics of foreign economic activity"

SummarySubject and purpose of work: The subject of this paper concerns theoretical and methodological approaches to the analysis of foreign economic activity of the region in the context of Euroregional cooperation, which is an important factor of socio-economic development of the country. The main purpose is to identify such economic categories as “foreign economic activity activation of the region”, “organizational and economic mechanism activation of foreign economic activity of the region in the context of Euroregional cooperation” as well as to develop a methodological scheme for the diagnostics of foreign economic activity of regions in the context of Euroregional cooperation.Materials and methods: In order to clarify theoretical concepts and identify similarities and differences in their definitions, the method of morphological analysis was adopted. This made it possible to systematize different options in terms of their characteristics and create new, hypothetically possible objects. Hence the research methods, of comparison, theoretical generalization and data systematization, etc. were applied.Results: Some interpretations of the key definitions of the categories “foreign economic activity activation of the region”, “organizational and economic mechanism activation of foreign economic activity of the region in context of Euroregional cooperation” were worked out and methodical principles of analysis of foreign economic activity of the region were offered. Also, foreign economic activity diagnostics of regions in the context of Euroregional cooperation was carried out and interregional differences were defined. The results of the study can help derive recommendations for the introduction of foreign economic activity activation of the regions.Conclusions: On the basis of the evaluation of Ukraine’s foreign economic activity in terms of exports, imports and the trade balance in 2010-2019, three periods were identified: 2010-2012 – before the crisis, 2013-2015 – economic crisis and its consequences, and 2016-2019 – the period after the crisis recovery and of unstable developmental trends. Significant interregional differentiation in the levels of the development of foreign economic activity of the regions of Ukraine was revealed. The leading regions in terms of foreign economic activity have proved to be Kyiv city, Dnipropetrovsk and Donetsk regions.

Summary Subject and purpose of work: The subject of this paper concerns theoretical and methodological approaches to the analysis of foreign economic activity of the region in the context of Euroregional cooperation, which is an important factor of socio-economic development of the country. The main purpose is to identify such economic categories as “foreign economic activity activation of the region”, “organizational and economic mechanism activation of foreign economic activity of the region in the context of Euroregional cooperation” as well as to develop a methodological scheme for the diagnostics of foreign economic activity of regions in the context of Euroregional cooperation. Materials and methods: In order to clarify theoretical concepts and identify similarities and differences in their definitions, the method of morphological analysis was adopted. This made it possible to systematize different options in terms of their characteristics and create new, hypothetically possible objects. Hence the research methods, of comparison, theoretical generalization and data systematization, etc. were applied. Results: Some interpretations of the key definitions of the categories “foreign economic activity activation of the region”, “organizational and economic mechanism activation of foreign economic activity of the region in context of Euroregional cooperation” were worked out and methodical principles of analysis of foreign economic activity of the region were offered. Also, foreign economic activity diagnostics of regions in the context of Euroregional cooperation was carried out and interregional differences were defined. The results of the study can help derive recommendations for the introduction of foreign economic activity activation of the regions. Conclusions: On the basis of the evaluation of Ukraine’s foreign economic activity in terms of exports, imports and the trade balance in 2010-2019, three periods were identified: 2010-2012 – before the crisis, 2013-2015 – economic crisis and its consequences, and 2016-2019 – the period after the crisis recovery and of unstable developmental trends. Significant interregional differentiation in the levels of the development of foreign economic activity of the regions of Ukraine was revealed. The leading regions in terms of foreign economic activity have proved to be Kyiv city, Dnipropetrovsk and Donetsk regions.

The article is dedicated to solving the scientific task of generalizing theoretical and methodological approaches to detecting the efficiency of foreign economic activity in modern economic conditions, depending on goals and expectations of the stakeholders. The analysis of works of domestic research scientists on the concept essence of efficiency of foreign economic activity has shown the need to study it as an integrated category that characterizes the enterprise’s potential and level of achieving foreign economic activity goals. It has been proven in the article that amidst business internationalization, the successful development of foreign economic activity of an enterprise is determined by its ability to solve the issues of accurately assessing the results of such an activity and increasing its efficiency. Thus, the efficiency of foreign economic activity of an enterprise needs to be detected based on the actual efficiency of separate operations (separate directions) of foreign economic activity and in comparison with the set goals that have to do with each separate operation (separate direction). Considering the fact that the efficiency of foreign economic activity is a relative concept, the factors that influence the formation of income and expenditure have been studied, as well as the need for an enterprise to respond flexibly to the change of these factors, as it has direct influence on the results of its economic activity. The critical analysis of approaches to assessing the efficiency of foreign economic activity has revealed that there usually tend to be two directions: the efficiency of export-import operations and the overall efficiency of foreign economic activity, that directly depend on the absolute profit value, however, this does not take into account the fact that foreign economic activity is tightly connected with other areas of an enterprise, which do not have a clear financial expression, and, thus, are ignored in such approaches. The expediency of using methods of complex diagnostic of foreign economic activity, which provides a choice of an optimal way of entering the foreign market and prolonging its effective functioning there, has been substantiated. It is noted that the diagnostic of the efficiency of foreign economic activity is a process of identification and analytical assessment of the influence that different factors have on foreign economic activity of an enterprise in order to reveal and solve all the existing and probable problems in the field of maintenance and performance of particular actions (stages) of entering foreign (international) markets and ensuring sustainable functioning there. Based on the conducted analysis, diagnostic of the efficiency of foreign economic activity is suggested to be carried out in 3 stages (informational and analytical support stage, analytical and calculation stage and management stage) and the content of each stage is revealed.

Changes in the external conditions of business in Ukraine, European integration vector of the country development, and possibilities of import/export operations facilitate foreign trade. Modern methods of strategic management and strategic diagnostics should be developed in line with international requirements and needs of managers in Ukraine and partners abroad. Therefore substantiation of innovation trends for enterprise development strategies on the international arena as a constituent of stable economy is important and necessary. The purpose of this article is to define innovative approaches to planning, development and implementation of strategies and to develop a comprehensive diagnosis of the strategic potential of foreign economic activity. During the research, the following methods: logical abstraction, modeling, PEST-analysis, systems analysis, graphic. The main results of the study are: 1) disclosure of the features of the construction of strategic management in international business; 2) analysis of European and American practices of strategic management of foreign economic activity of enterprises; 3) study of algorithmic scheme of strategic management in the Ukraine; 4) justification of methods of three-level system of strategic analysis using matrix methods of assessment; 5) the classification of the main methods of matrix analysis within groups: macro, meso, macro level; 6) a comprehensive diagnosis of the strategic potential of foreign economic activity of enterprises in Ukraine. The study proved the main areas of innovation and strategic principles of international management and comprehensive methodology for strategic planning matrix based on innovative methods

Introduction. While carrying out production, economic and foreign economic activities, domestic enterprises face important issues of ensuring their financial stability and effective management of the financial resources’ formation, distribution and use process. The purpose of the paper is to build a conceptual model for managing the financial resources of an enterprise in the implementation of foreign economic activity, which will allow for high-quality diagnostics of financial resources at the stages of their formation, distribution and use. Results. The influence of globalization processes on the functioning of domestic business entities provides for a periodic renewal of the mechanism and model for financial resources management. The main constituent elements of the model for managing the enterprise financial resources are characterized, namely: the aim and main objectives; subjects of financial resources management; technology of financial resources strategic management at the enterprise; factors of influence on the management processes and the system of ensuring the financial resources management of the enterprise in the implementation of foreign economic activity. The technology of the company's financial resources strategic management has been developed. A conceptual model for managing the financial resources of an enterprise in the implementation of foreign economic activity has been formed, which considers organizational, functional and information support. Conclusion. The application of the financial resource management conceptual model in the practical activities of enterprises will ensure the achievement of the goals and objectives of the enterprise, contribute to the improvement of its financial condition and the movement of financial flows, as well as allow alternative management decision-making on the formation and implementation of the strategy for managing the financial resources of the enterprise in the conditions of new foreign markets development.

In modern economic conditions, efficiency and quality of assessment of prospects for development of business entity are the key to the best timely management decision making, contributing to increase in efficiency of economic entity. Efficient methods for assessing the financial status of agricultural companies and diagnosing critical situations allows to determine the threat of bankruptcy at the earliest stages and to use all the possibilities to neutralize it. Improving the methodology for conducting financial analysis of companies’ solvency in order to identify symptoms of crisis situations in organizations of agro-industrial complex more accurately and timely through the development of new diagnostic methods adapted to the existing conditions of economic activity is an urgent task of scientific research of local and foreign researchers. Probability of eliminating the consequences of negative impact on the economy of companies of agro-industrial complex depends on timely and accurate diagnostics of critical situations. The paper dwells on the areas of improvement of methodological approaches for assessment of financial status of agricultural companies. Taking into account the generalization of local and foreign experience, new models and directions for improving the methods for assessment of the financial status of agricultural companies and diagnosing economic insolvency (bankruptcy) existing in the country are proposed, including features for assessing the financial status of peasant farms. The problems discussed in the paper are of interest within the framework of the developed model of fundamental diagnostics based on the method of expert assessments of the major risks probability, which impact can adversely affect the financial status of an agricultural company and lead to economic crisis, as well as method for assessing the economic efficiency and financial status of peasant (farm) business, taking into account specifics of accounting and specifics of agricultural production.

The article considers foreign economic priorities of investment infrastructure development of agri-food production entities of Ukraine. A comprehensive methodological approach to assessing the effective diversification of investment infrastructure of agri-food production entities has been developed. It is substantiated diagnostics of attracting foreign direct investment in the development of agri-food production allows forming an export-oriented type of state economy, identify the main sources of technical equipment for agribusiness and master innovative technologies, form production potential and mechanism for implementing strategic investment goals. An algorithm for calculating the level of attractiveness of the investment infrastructure of agri-food production entities has been developed. The dynamics of foreign trade in agri-food products of the steppe zone of Ukraine is given. The amount of foreign direct investment from foreign economic activity of agri-food production entities in the economy of the regions of the Steppe zone of Ukraine is determined. The geography of agri-food exports of the steppe zone of Ukraine in the international trade markets is presented. The forecast volume of exports of agri-food products in the regions is calculated and the limit parameters of indicators of attractiveness of investment infrastructure of subjects at attraction of direct foreign investments from foreign economic operations are defined

The increasing role of the economic security of particular regions is characteristic of the present time since the totality of their indicators largely determines the level of national security. Therefore, in management, one should pay significant attention to the issues of increasing economic security in the region. The paper presents the study of economic security indicators in the Novosibirsk region. The authors analyzed some specific indicators and indices necessary for the formation of a comprehensive opinion on the economic security level of the territory, such as real incomes of the population, the employment level, depreciation of fixed assets in the region, the share of foreign investments in the total volume of investments in fixed assets, the growth rate of real incomes, and others. The analysis of economic security indicators allowed identifying some factors that should be given special attention. When managing the economic security of the Novosibirsk region, it is necessary to focus on reducing the population with substandard incomes, increasing the investment activity of citizens, and the attractiveness of the territory for foreign investors. The authors analyzed the level of economic security of the Novosibirsk region. The study revealed both the positive factors in this aspect and some indicators, the value of which causes significant anxiety. Among the positive factors, it is necessary to note the high employment of the population and low unemployment, as well as the indicators showing the R&D investments, which can have a positive effect on the scientific and innovative development of the region. Among the negative indicators, one can note a high level of poverty and low investment activity in the territory.

Relevance of research topic. One of the effective methods of choosing strategies of increasing the efficiency of enterprises’ economic activity in various industries can be a comprehensive economic diagnosis as a means to adjust the strategy and tactics of manufacturers and identify effective ways for their further development. Formulation of the problem. Today’s difficult economic conditions require not only to stabilize the enterprises’ commercial activity but also to increase production efficiency and competitiveness in the market of products and services. A means to increase the enterprises’ efficiency is to conduct a comprehensive economic diagnosis. This is of particular relevance for the country’s dairy enterprises due to the specifics of supply and marketing, perishable produce, and the crisis of the dairy market for today. Analysis of recent research and publications. This scientific problem was studied by several domestic and foreign scientists, such as I. Farion, L. Savchuk, S. Zhukevych, I. Kryvov’iaziuk, T. Bozhydarnik, A. Kiriienko, N. Zymyn, I. Zelenchuk, T. Horodnia, I. Moiseienk., N. Kushnir, N. Sarai, O. Hetman, T. Zahorna, N. Bobko, Yu. Koval., V. Zabrodskyi, V. Zinchenko, A. Vartanov, O. Hadzevych, T. Kostenko. Selection of unexplored parts of the general problem. In most scientific works the attention is focused on the study of individual components of economic diagnostics. As for the development of methodological approaches to the realization and implementation of a full-fledged methodology of integrated economic diagnostics, it is not sufficiently reflected in the economic literature. Setting the task, the purpose of the study. Theoretical substantiation and development of methodical and practical recommendations for improving the process of comprehensive economic diagnostics of the dairy industry enterprises’ economic activity (on the materials of dairy enterprise “Pereiaslav-Molproduct” LLC) for increasing business efficiency. Method or methodology for conducting research. A set of general scientific and specific research methods, as well as non-formalized and formalized methods, were used to achieve the goal and to cope with the tasks set in the research. The results of research. Scientific and methodological approaches and practical recommendations for improving the process of the enterprise comprehensive diagnostics are substantiated and the ways to increase the efficiency of economic activity of the dairy industry are proposed. The field of application of results. The results of the study can be used by the enterprises in the diagnostics of the current state of enterprise by its own, based on strategic considerations, as well as in the development of business plans, investment and innovation projects, strategic development plans; and in the educational process (in the preparation of the relevant sections of textbooks and tutorials for courses “Economic Analysis”, “Management”, “Strategy of Enterprise”, “Methods and Models of Optimization”). Conclusions according to the article. The theoretical considerations formulated and substantiated in the research made it possible to present scientific and practical proposals regarding the application of the model of comprehensive economic diagnostics to increase the efficiency of enterprises’ activity.

У роботі досліджено теоретичні та методологічні засади та розробка практичних рекомендацій щодо вдосконалення системи зовнішньоекономічної діяльності підприємства. Цілі та основні принципи зовнішньоекономічної діяльності підприємства.
The theoretical and methodological principles and develop practical recommendations for improving the system of foreign economic activity of the enterprise. The objectives and basic principles of foreign economic activity of the enterprise.

Коваленко Ю. Надірян К. Сучасні проблеми управління зовнішньоекономічною діяльністю // Сучасні проблеми менеджменту: матеріали XVII Міжнародної науково-практичної конференції. – Національний авіаційний університет. – Київ, 2021. - С. 23-24
From the theoretical perspective it is important to mention that, first of all, the scientific nature of the foreign economic activity means the development of this activity in accordance with objective economic laws. Practically according to this principle, management of international business transactions involves the organization of demand and supply of its products abroad, the price level, and the ratio to costs in the exporting country. One of the main problems of management of foreign economic activity is miscalculations - the knowledge of managers of enterprises of existing theories of international trade helps them to avoid a significant part of miscalculations, and additionally, it helps reasonably predict changes in international markets. We can, also, mention that this principle is especially important in the implementation of international financial calculations, which must be based on changes in exchange rates.
З теоретичної точки зору важливо відзначити, що, перш за все, науковий характер зовнішньоекономічної діяльності означає розвиток цієї діяльності відповідно до об'єктивних економічних законів. Практично відповідно до цього принципу управління міжнародними діловими операціями передбачає організацію попиту і пропозиції своєї продукції за кордоном, рівня цін і співвідношення до витрат в країні-експортері. Однією з головних проблем управління зовнішньоекономічною діяльністю є прорахунки-знання керівниками підприємств існуючих теорій міжнародної торгівлі допомагає їм уникнути значної частини прорахунків, а також, крім того, допомагає обґрунтовано прогнозувати зміни на міжнародних ринках. Ми також можемо відзначити, що цей принцип особливо важливий при здійсненні міжнародних фінансових розрахунків, які повинні ґрунтуватися на змінах валютних курсів.

Офшорна фінансова діяльність посідає значне місце у глобальній фінансовій системі, спостерігається суттєве зростання обсягів офшорних операцій та зростання кількості офшорних фінансових установ. Зважаючи на широке використання офшорів вітчизняними підприємцями та значні масштаби відтоку капіталу з економіки України в офшорні зони, дослідження негативного впливу офшорів на національну економіку та знаходження шляхів вирішення даної проблеми на сьогоднішній день є особливо актуальними. У роботі надана характеристика теоретичних засад офшорних зон, розглянуті принципи, покладені в його основу, даються різні класифікації офшорних зон, їх функціональне призначення. Описані цілі створення офшорних зон його переваги та недоліки. Розглянуті особливості функціонування офшорних юрисдикцій в сучасних умовах. Надані основні напрямки протидії негативним наслідкам діяльності офшорних юрисдикцій, наведені проблеми функціонування офшорного бізнесу і можливі шляхи їх вирішення.
The object of study of the master's thesis is the mechanism of functioning of offshore zones, the subject - financial relations that arise in the process of financial and economic activities of offshore zones and their impact on the economy. The methodological basis of the work is a systematic approach and a dialectical method. In addition, the methods of unity of historical and logical, comparative analysis, induction and deduction, as well as positive and normative approaches were used in the work. Results: the essence of the concept and history of offshore zones development is considered, the specifics of separate offshore zones and their characteristics and specialization are studied, advantages of doing business in offshore zones are allocated, the problems connected with capital migration to offshore zones are opened, problems of offshorization and deoffshorization of domestic business. The theoretical significance of the master's thesis is to justify the need to regulate national legislation on the deoffshorization of business in the country. The practical significance of the work lies in the generalization and systematization of a large array of statistical data, recommendations and proposals of scientists, specialists dealing with the problem of offshorization and deoffshorization in modern conditions. In the near future, the role of offshore zones in the world economy will weaken as more countries join the organization to combat further offshorization of business through various agreements.

The textbook contains the main elements of the methodology for diagnostics and analysis of financial and economic activities of the organization. The chapters of the textbook consider the role, significance, types, methods of analysis of financial and economic activities of the organization, its mathematical tools, the history and new directions of analysis of the organization's activities in Russian and foreign analytical practice, as well as methods for analyzing the volume of production, sales and cost of production, the analysis of security and use of material and labor resources, fixed assets, analysis of financial results and financial condition of the organization. Meets the requirements of the Federal state educational standard of higher education of the latest generation. For University students in the field of training 38.03.01 " Economics "and other areas, studying the disciplines" Analysis and diagnostics of financial and economic activities"," Complex economic analysis", as well as students in the system of retraining.

The textbook deals with a set of issues related to the organization of foreign economic activity of a modern Russian enterprise. The article covers the basics of foreign economic activity, organization of international commercial operations, customs and international transportation, reveals the essence and features of international marketing, and shows the role of the state in managing foreign economic activity. The features of entering the world market, choosing a foreign partner, pricing, preparation and execution of foreign trade transactions are shown. Various aspects of insurance of foreign economic activity are revealed. Meets the requirements of Federal state educational standards of higher education of the latest generation. For bachelors and masters of higher education institutions studying in economic areas, as well as for students of the system of professional development and retraining, specialists in Economics, managers of various levels.

The textbook deals with the problems of conducting foreign economic activity from the point of view of taxation, accounting, analysis, audit, application of Russian and international legislation regulating this type of activity. All theoretical provisions are analyzed on the example of practical situations that arise in real practice. The presented theoretical material and practical situations are designed to help master the conduct of foreign economic activity. The textbook contains diagrams, tables of typical operations, sample documents, verification tests on each topic, practical tasks and applications of the necessary documents for a more complete development of the discipline. Meets the requirements of the federal state educational standards of higher education of the latest generation. For bachelors, undergraduates, postgraduates studying in economic programs and studying foreign economic activity in depth, the textbook will also be useful for teachers of economic faculties of universities and practitioners.

The article considers various options for determining the significance of the foreign economic activity of an enterprise, including the implementation of the main functions or development strategies of an enterprise, depending on the motives of foreign economic activity. Six levels of manifestation of the effect of the foreign economic activity of a single enterprise are identified: the level of the enterprise, regional, sectoral, national, supranational levels, the level of the world economy. Briefly characterized are the areas of manifestation of the effect of the foreign economic activity of the enterprise, such as budget, production, investment, social, other. The nature of the manifestation of the effect (direct, indirect) and its orientation (positive, negative) are indicated.

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%.

The UK government’s Integrated Review of security, defence, development and foreign policy, published in March 2021 alongside a supporting defence command paper, set a new course for UK national security and highlighted opportunities for an innovative approach to international engagement activity. The Integrated Review focused principally on the state threats posed by China’s increasing power and by competitors – including Russia – armed with nuclear, conventional and hybrid capabilities. It also stressed the continuing risks to global security and resilience due to conflict and instability in weakened and failed states. These threats have the potential to increase poverty and inequality, violent extremism, climate degradation and the forced displacement of people, while presenting authoritarian competitors with opportunities to enhance their geopolitical influence. There are moral, security and economic motives to foster durable peace in conflict-prone and weakened regions through a peacebuilding approach that promotes good governance, addresses the root causes of conflict and prevents violence, while denying opportunities to state competitors. The recent withdrawal from Afghanistan serves to emphasize the complexities and potential pitfalls associated with intervention operations in complex, unstable regions. Success in the future will require the full, sustained and coordinated integration of national, allied and regional levers of power underpinned by a sophisticated understanding of the operating environment. The UK armed forces, with their considerable resources and global network, will contribute to this effort through ‘persistent engagement’. This is a new approach to overseas operations below the threshold of conflict, designed as a pre-emptive complement to warfighting. To achieve this, the UK Ministry of Defence (MOD) must develop a capability that can operate effectively in weak, unstable and complex regions prone to violent conflict and crises, not least in the regions on the eastern and southern flanks of the Euro-Atlantic area. The first step must be the development of a cohort of military personnel with enhanced, tailored levels of knowledge, skills and experience. Engagement roles must be filled by operators with specialist knowledge, skills and experience forged beyond the mainstream discipline of combat and warfighting. Only then will individuals develop a genuinely sophisticated understanding of complex, politically driven and sensitive operating environments and be able to infuse the design and delivery of international activities with practical wisdom and insight. Engagement personnel need to be equipped with: An inherent understanding of the human and political dimensions of conflict, the underlying drivers such as inequality and scarcity, and the exacerbating factors such as climate change and migration; - A grounding in social sciences and conflict modelling in order to understand complex human terrain; - Regional expertise enabled by language skills, cultural intelligence and human networks; - Familiarity with a diverse range of partners, allies and local actors and their approaches; - Expertise in building partner capacity and applying defence capabilities to deliver stability and peace; - A grasp of emerging artificial intelligence technology as a tool to understand human terrain; - Reach and insight developed through ‘knowledge networks’ of external experts in academia, think-tanks and NGOs. Successful change will be dependent on strong and overt advocacy by the MOD’s senior leadership and a revised set of personnel policies and procedures for this cohort’s selection, education, training, career management, incentivization, sustainability and support.

Recent data suggest that the technical staff’s appraisals of the condition and development of economic activity, inflation and the labor market have been in line with current trends, marked by a decline in demand and the persistence of ample excess productive capacity. A significant projected fall in output materialized in the second quarter, contributing to a decline in inflation below the 3% target and reflected in a significant deterioration of the labor market. A slow recovery in output and employment is expected to continue for the remainder of 2020 and into next year, alongside growing inflation that should remain below the target. The Colombian economy is likely to undergo a significant recession in 2020 (GDP contraction of 7.6%), though this may be less severe than projected in the previous report (-8.5%). Output is expected to have begun a slow recovery in the second half of this year, though it is not projected to return to pre-pandemic levels in 2021 amid significant global uncertainty. The output decline in the first half of 2020 was less severe than anticipated, thanks to an upward revision in first-quarter GDP and a smaller contraction in the second quarter (-15.5%) than had been projected (-16.5%). Available economic indicators suggest an annual decline in GDP in the third quarter of around 9%. No significant acceleration of COVID-19 cases that would imply a tightening of social distancing measures is presumed for the remainder of this year or in 2021. In that context, a gradual opening of the economy would be expected to continue, with supply in sectors that have been most affected by the pandemic recovering slowly as restrictions on economic activity continue to be relaxed. On the spending side, an improvement in consumer confidence, suppressed demand for goods and services, low interest rates, and higher expected levels of foreign demand should contribute to a recovery in output. A low base of comparison would also help explain the expected increase in GDP in 2021. Based on the conditions laid out above, economic growth in 2020 is expected to be between -9% and -6.5%, with a central value of -7.6%. Growth in 2021 is projected to be between 3% and 7%, with a central value of 4.6% (Graph 1.1). Upward revisions compared to the July report take into account a lower-than-expected fall in first-semester growth and a somewhat faster recovery in the third quarter in some sectors. The forecast intervals for 2020 and 2021 growth tightened somewhat but continue to reflect a high degree of uncertainty over theevolution of the pandemic, the easures required to deal with it, and their effects on global and domestic economic activity.

Banco de la República provides a comprehensive overview of Colombia’s finan¬cial infrastructure in its Payment Systems Report, which is an important product of the work it does to oversee that infrastructure. The figures published in this edition of the report are for the year 2020, a pandemic period in which the con¬tainment measures designed and adopted to alleviate the strain on the health system led to a sharp reduction in economic activity and consumption in Colom¬bia, as was the case in most countries. At the start of the pandemic, the Board of Directors of Banco de la República adopted decisions that were necessary to supply the market with ample liquid¬ity in pesos and US dollars to guarantee market stability, protect the payment system and preserve the supply of credit. The pronounced growth in mone¬tary aggregates reflected an increased preference for liquidity, which Banco de la República addressed at the right time. These decisions were implemented through operations that were cleared and settled via the financial infrastructure. The second section of this report, following the introduction, offers an analysis of how the various financial infrastructures in Colombia have evolved and per¬formed. One of the highlights is the large-value payment system (CUD), which registered more momentum in 2020 than during the previous year, mainly be¬cause of an increase in average daily remunerated deposits made with Banco de la República by the General Directorate of Public Credit and the National Treasury (DGCPTN), as well as more activity in the sell/buy-back market with sovereign debt. Consequently, with more activity in the CUD, the Central Securi¬ties Depository (DCV) experienced an added impetus sparked by an increase in the money market for bonds and securities placed on the primary market by the national government. The value of operations cleared and settled through the Colombian Central Counterparty (CRCC) continues to grow, propelled largely by peso/dollar non-deliverable forward (NDF) contracts. With respect to the CRCC, it is important to note this clearing house has been in charge of managing risks and clearing and settling operations in the peso/dollar spot market since the end of last year, following its merger with the Foreign Exchange Clearing House of Colombia (CCDC). Since the final quarter of 2020, the CRCC has also been re¬sponsible for clearing and settlement in the equities market, which was former¬ly done by the Colombian Stock Exchange (BVC). The third section of this report provides an all-inclusive view of payments in the market for goods and services; namely, transactions carried out by members of the public and non-financial institutions. During the pandemic, inter- and intra-bank electronic funds transfers, which originate mostly with companies, increased in both the number and value of transactions with respect to 2019. However, debit and credit card payments, which are made largely by private citizens, declined compared to 2019. The incidence of payment by check contin¬ue to drop, exhibiting quite a pronounced downward trend during the past last year. To supplement to the information on electronic funds transfers, section three includes a segment (Box 4) characterizing the population with savings and checking accounts, based on data from a survey by Banco de la República con-cerning the perception of the use of payment instruments in 2019. There also is segment (Box 2) on the growth in transactions with a mobile wallet provided by a company specialized in electronic deposits and payments (Sedpe). It shows the number of users and the value of their transactions have increased since the wallet was introduced in late 2017, particularly during the pandemic. In addition, there is a diagnosis of the effects of the pandemic on the payment patterns of the population, based on data related to the use of cash in circu¬lation, payments with electronic instruments, and consumption and consumer confidence. The conclusion is that the collapse in the consumer confidence in¬dex and the drop in private consumption led to changes in the public’s pay¬ment patterns. Credit and debit card purchases were down, while payments for goods and services through electronic funds transfers increased. These findings, coupled with the considerable increase in cash in circulation, might indicate a possible precautionary cash hoarding by individuals and more use of cash as a payment instrument. There is also a segment (in Focus 3) on the major changes introduced in regulations on the retail-value payment system in Colombia, as provided for in Decree 1692 of December 2020. The fourth section of this report refers to the important innovations and tech¬nological changes that have occurred in the retail-value payment system. Four themes are highlighted in this respect. The first is a key point in building the financial infrastructure for instant payments. It involves of the design and im¬plementation of overlay schemes, a technological development that allows the various participants in the payment chain to communicate openly. The result is a high degree of interoperability among the different payment service providers. The second topic explores developments in the international debate on central bank digital currency (CBDC). The purpose is to understand how it could impact the retail-value payment system and the use of cash if it were to be issued. The third topic is related to new forms of payment initiation, such as QR codes, bio¬metrics or near field communication (NFC) technology. These seemingly small changes can have a major impact on the user’s experience with the retail-value payment system. The fourth theme is the growth in payments via mobile tele¬phone and the internet. The report ends in section five with a review of two papers on applied research done at Banco de la República in 2020. The first analyzes the extent of the CRCC’s capital, acknowledging the relevant role this infrastructure has acquired in pro¬viding clearing and settlement services for various financial markets in Colom¬bia. The capital requirements defined for central counterparties in some jurisdic¬tions are explored, and the risks to be hedged are identified from the standpoint of the service these type of institutions offer to the market and those associated with their corporate activity. The CRCC’s capital levels are analyzed in light of what has been observed in the European Union’s regulations, and the conclusion is that the CRCC has a scheme of security rings very similar to those applied internationally and the extent of its capital exceeds what is stipulated in Colombian regulations, being sufficient to hedge other risks. The second study presents an algorithm used to identify and quantify the liquidity sources that CUD’s participants use under normal conditions to meet their daily obligations in the local financial market. This algorithm can be used as a tool to monitor intraday liquidity. Leonardo Villar Gómez Governor