Academic literature on the topic 'Consumer goods industry'

With the rise of a new generation of technology and industrial changes, the service-oriented manufacturing industry has become the direction of future development. With the background of new manufacturing, this paper constructs an economic development threshold model of employment density of consumer goods industry based on data from Shanghai and Tokyo from 2007 to 2016, and empirically analyzes the impact of the employment density of the consumer goods industry on urban economic development under different population densities. At the same time, by comparing the experience of Tokyo, the development status and prospects of Shanghai’s consumer goods industry are explored. The study found that the threshold of Tokyo’s consumer goods industry is 0.608. When population density is lower than this threshold, the consumer goods industry continues to promote the economic development of Tokyo; however, when the population density is higher than this threshold, the consumer goods industry begins to inhibit the economic development of Tokyo. The Shanghai consumer goods industry threshold is 0.329. Under the threshold, most of the consumer goods industry contributions to the economy are negative, but above the threshold, they begin to show a positive trend. The inflection point of the effect curve of Tokyo’s consumer goods industry on economic development has appeared, but the inflection point of Shanghai’s consumer goods industry has not yet appeared. Compared with Tokyo, the economic vitality of Shanghai’s consumer goods industry has not yet been fully released. With the continued increase of population density in Shanghai, the growth potential of the consumer goods industry is huge, and it is expected to reshape the flourishing age of Shanghai’s light industry brand.

Debt maturity structure plays an important role in enterprises’ capital structure policies, and debt maturity varies from industry to industry. The paper investigates the determinants that affect the debt maturity structure of listed firms in the consumer goods industry from 2009 to 2019. The data is collected from consumer goods companies listed on the Vietnam Stock Exchange. The feasible generalized least squares (FGLS) estimation is demonstrated to consider not only micro but also macroeconomic variables that have influenced the corporate debt maturity policy. The empirical results show that five microeconomic factors, such as capital structure, asset structure, asset liquidity, profitability, and firm size, have influenced the debt maturity and are statistically significant. Meanwhile, macroeconomic factors such as inflation rate and credit growth have significantly affected the corporate debt maturity. Finally, the paper provides some suggestions for financial managers on the optimal corporate debt maturity in the consumer goods sector and recommendations for policy-makers when implementing macroeconomic policies.

This study aims to examine the effect of profitability, sales growth, and firm size on dividend policy in manufacturing companies in the consumer goods industry sector which are listed on the Indonesia Stock Exchange (IDX). This type of research is associative research. The population in this study is the manufacturing companies in the consumer goods industry sector registered on IDX for the period 2012-2017 with sampling using a purposive sampling technique. Samples were obtained by 16 companies from 42 study populations. Data was obtained from ICMD companies and financial statements of manufacturing companies in the consumer goods industry sector through the IDX website. The data analysis technique used is multiple regression analysis. To test the hypothesis using the t test. The results showed that profitability had a positive and significant effect on dividend policy in the consumer goods industry sector companies on the IDX, while sales growth had a negative and not significant effect on dividend policies in the consumer goods industry sector companies on the IDX. Meanwhile, firm size has a positive and significant influence on dividend policy on consumer goods industry sector companies listed on the IDX.Keywords: profitability, sales growth, firm size, and dividend policy

The article examines the status and development of the apparel market in Uzbekistan, and changes in its structure based on marketing research and evaluates the impact of changes in the retail segment of the apparel market, the composition of the consumer market of garments, and the changes in consumer segment. Based on the competitive position on the assortment of retail clothing, strategies for pushing the garments from China, Turkey and other countries into the domestic market for each assortment of clothing are identified. Changes in consumption by squeezing an assortment of competing countries from the domestic market are studied on the basis of panel research, and a matrix of factors influencing its formation and wardrobe formation.

Consumers today tend to look for material comfort and satisfaction from use and consumption of range of consumer durable goods, which are expected to induce consumer well-being. The current study investigates the consumer well-being of car users in Delhi and National Capital Region as this region has been recognized as biggest automobile market in India. Car industry is in the focus of the study because of its distinct features viz-aviz other consumer durable goods. The study is built around the existing conceptualization and measures of consumer well-being and intends to develop a separate measure of consumer well-being of car users in Delhi NCR through an exploratory research design. Three dimensional measure of consumer well-being has been developed.

This article is devoted to the analysis of consumer segments in the market of designer goods in the fashion industry. The article presents the author's segmentation of consumers with an analysis of the main characteristics of each segment. The definitions of the main concepts used by the author are given.

This research is analyzing the score of Indonesia Stock Exchange listed corporations under consumer goods industry sector’s compliance on Good Corporate Governance using ASEAN Corporate Governance. Data used are originated from corporations’ annual reports, financial report, and publicly-accessed information in the period of 2018 over 32 consumer goods corporations. The data gathered was processed through Microsoft Excel. Results show that on consumer goods industry’s corporations, there are three good corporate governance principles (Rights of Shareholders, Equitable Treatment of Shareholders, Responsibilities of the Board) scored not more than 50%, while the other two (Role of Stakeholders, Disclosure and Transparency ) have achieved the score of over 50% of the overall points of recommendations.

Thesis (MBA)--Stellenbosch University, 2003.
ENGLISH ABSTRACT: Forecasting the future has always been one of the man's strongest desires. The aim to determine the future has resulted in scientifically based forecasting models of human health, behaviour, economics, weather, etc. The main purpose of forecasting is to reduce the range of uncertainty within which management decisions must be made. Forecasts are only effective if they are utilized by those who have decisionmaking authority. Forecasts need to be understood and appreciated by decision makers so that they find their way into management of the firm. Companies still predominantly rely on judgemental forecasting methods, most often on an informal basis. There is a large literature base that point to the numerous biases inherent in judgemental forecasting. Most companies know that their forecasts are incorrect but don't know what to do about it and choose to ignore the issue, hoping that the problem will solve itself. The collaborative forecasting process attempts to use history as a baseline, but supplement current knowledge about specific trends, events and other items. This approach integrates the knowledge and information that exists internally and externally into a single, more accurate forecast that supports the entire supply chain. Demand forecasting is not just a matter of duplicating or predicting history into the future. It is important that one person should lead and manage the process. Accountability needs to be established. An audit on the writer's own organization indicated that no formal forecasting process was present. The company's forecasting process was very political, since values were entered just to add up to the required targets. The real gap was never fully understood. Little knowledge existed regarding statistical analysis and forecasting within the marketing department who is accountable for the forecast. The forecasting method was therefore a top-down approach and never really checked with a bottom up approach. It was decided to learn more about the new demand planning process prescribed by the head office, and to start implementing the approach. The approach is a form of a collaborative approach which aims to involve all stakeholders when generating the forecast, therefore applying a bottom up approach. Statistical forecasting was applied to see how accurate the output was versus that of the old way of forecasting. The statistical forecast approach performed better with product groups where little changed from previous years existed, while the old way performed better where new activities were planned or known by the marketing team. This indicates that statistical forecasting is very important for creating the starting point or baseline forecast, but requires qualitative input from all stakeholders. Statistical forecasting is therefore not the solution to improved forecasting, but rather part of the solution to create robust forecasts.
AFRIKAANSE OPSOMMING: Vooruitskatting van die toekoms was nog altyd een van die mens se grootste begeertes. Die doel om die toekoms te bepaal het gelei tot wiskundige gebaseerde modelle van die mens se gesondheid, gedrag, ekonomie, weer, ens. The hoofdoel van vooruitskatting is om die reeks van risikos te verminder waarbinne bestuur besluite moet neem. Vooruitskattings is slegs effektief as dit gebruik word deur hulle wat besluitnemingsmag het. Vooruitskattings moet verstaan en gewaardeer word deur die besluitnemers sodat dit die weg kan vind na die bestuur van die firma. Maatskappye vertrou nog steeds hoofsaaklik op eie oordeel vooruitskatting metodes, en meestal op 'n informele basis. Daar is 'n uitgebreide literatuurbasis wat daarop dui dat heelwat sydigheid betrokke is by vooruitskattings wat gebaseer is op eie oordeel. Baie organisasies weet dat hulle vooruitskattings verkeerd is, maar weet nie wat daaromtrent te doen nie en kies om die probleem te ignoreer, met die hoop dat die probleem vanself sal oplos. Die geïntegreerde vooruitskattingsproses probeer om die verlede te gebruik as 'n basis, maar voeg huidige kennis rakende spesifieke neigings, gebeurtenisse, en ander items saam. Hierdie benadering integreer die kennis en informasie wat intern en ekstern bestaan in 'n enkele, meer akkurate vooruitskatting wat die hele verskaffingsketting ondersteun. Vraagvooruitskatting is nie alleen 'n duplisering of vooruitskatting van die verlede in die toekoms in nie. Dit is belangrik dat een persoon die proses moet lei en bestuur. Verantwoordelikhede moet vasgestel word. 'n Oudit op die skrywer se organisasie het getoon dat geen formele vooruitskattingsprosesse bestaan het nie. Die maatskappy se vooruitskattingsproses was hoogs gepolitiseerd, want getalle was vasgestel wat in lyn was met die nodige teikens. Die ware gaping was nooit werklik begryp nie. Min kennis was aanwesig rakende statistiese analises en vooruitskatting binne die bemarkingsdepartement wat verantwoordelik is vir die vooruitskatting. Die vooruitskatting is dus eerder gedoen op 'n globale vlak en nie noodwendig getoets deur die vooruitskatting op te bou uit detail nie. Daar is besluit om meer te leer rakende die nuwe vraagbeplanningsproses, wat voorgeskryf is deur hoofkantoor, en om die metode te begin implementeer. Die metode is 'n vorm van 'n geïntegreerde model wat beoog om alle aandeelhouers te betrek wanneer die vooruitskatting gedoen word, dus die vooruitskatting opbou met detail. Statistiese vooruitskatting was toegepas om te sien hoe akkuraat die uitset was teenoor die ou manier van vooruitskatting. Die statistiese proses het beter gevaar waar die produkgroepe min verandering van vorige jare ervaar het, terwyl die ou manier beter gevaar het waar bemarking self die nuwe aktiwiteite beplan het of bewus was daarvan. Dit bewys dat statistiese vooruitskatting baie belangrik is om die basis vooruitskatting te skep, maar dit benodig kwalitatiewe insette van all aandeelhouers. Statistiese vooruitskattings is dus nie die oplossing vir beter vooruitskattings nie, maar deel van die oplossing om kragtige vooruitskattings te skep.

Thesis: Ph. D. in Engineering Systems, Massachusetts Institute of Technology, School of Engineering, Institute for Data, Systems, and Society, 2015.
This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections.
Cataloged from student-submitted PDF version of thesis.
Includes bibliographical references (pages 165-169).
The cost of waste for products such as soft drinks, shelf stable dry food, and dairy in the consumer packaged goods industry is massive, about $15 billion annually in the U.S.A. This thesis focuses on waste associated with product expiration since this type of waste involves both manufacturers and retailers as well as different functional areas such as production, warehousing, sales, procurement, and store operations. As a result, the industry has not made much progress in reducing this type of waste. We study three problems related to product expiration. Chapter 2 presents a descriptive study examining the root causes of product expiration and their impact on expiration. Using econometrics and our collaborator's data, we find that the amount of expiration can be reduced considerably via a case size reduction. We identify the next important opportunities in the areas of inventory aging in the manufacturer's supply chain and sales incentives, and thus the remainder of this thesis focuses on these two areas. Chapter 3 examines the manufacturer's sell-or-dispose decision for aged inventory. We develop an optimization model to find the minimum remaining shelf life below which the manufacturer does not sell the product since the cost of expiration is more than the sunk cost of production. We use machine learning to approximate optimum values which can be used as a low cost alternative method. If supply chain managers are held accountable for the cost of disposed items, they will have an incentive to better manage inventory. As a result, expiration will be reduced. Chapter 4 analyses sales-force compensation schemes from the perspective of product expiration caused by overselling. We develop a game theoretic model of the decision process of the manufacturer and the sales representative. We find a compensation scheme that aligns the interests of the manufacturer and the sales representative preventing overselling while achieving full profit potential for the manufacturer.
by Arzum Akkas.
Ph. D. in Engineering Systems

Date:                             June 8th, 2012 Course:                          EFO 705 Master Thesis Course Program:                       International Marketing Authors:                        Jolita Kilinskaite (jke11003), Simone Kolar (skr11003) Title: Companies´ Reactions to Rival´ s Actions in the Fast Moving Consumer Goods (FMCG) Industry-  Examples of companies in the cosmetics goods industry   Research Question: How do companies in the FMCG industry react to rivals actions?   Purpose: The purpose of this thesis is to describe and analyze how companies react to rival´s actions   Method: The thesis is based on secondary research and primary research. The primary research is based on semi-structured interview processes and critical incidents   Target audience: Companies in the FMCG industry, Academics and Teachers in the field of Strategy and Marketing who are interested in competitive    marketing strategies in the FMCG industry   Keywords: Differentiation strategy, Imitation Strategy, Co-opetition, Rival´s actions, FMCG industry, Competition, Critical incidents   Conclusion: This master thesis concentrates in theory on three common reaction strategies in marketing, which are defined as differentiation, limitation, and co-opetition and describes possible rival´s actions, the roots that cause certain reaction strategies. Based on the literature, interviews were conducted with the marketing managers from four different companies in the cosmetics goods industry, in order to prove whether the interviewed managers support the defined reaction strategies. The result was a support for the differentiation and imitation strategy. However, co-opetition was only used by one of the companies and is therefore seen as a less important strategy, at least in the marketing departments of the         interviewed companies.

Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management; and, (S.M.)--Massachusetts Institute of Technology, Engineering Systems Division; in conjunction with the Leaders for Global Operations Program at MIT, 2010.
Cataloged from PDF version of thesis.
Includes bibliographical references (p. 104-106).
As a consumer packaged goods company, "Company X" manufactures products "make-to-stock"; therefore, having reliable demand forecasts is fundamental for successful planning and execution. Not isolated to "Company X" or to the CPG industry, current global economic conditions have forced companies to seek increased cash flows as a method for weathering this financially difficult period. As a result, many organizations are pursuing improvements in demand forecasting and planning methodologies as a precursor to inventory optimization and to further liquidity positions. This thesis attempts to improve forecasting and planning processes by developing a framework that focuses on four general components identified as key for success by experts and practitioners. In addition, this thesis explores these components while utilizing "Company X" as the case study for improvement. The four forecasting and planning components explored at "Company X" include Data Treatment, Forecast Models, Planning Process, and Organizational Behavior. In the Data Treatment section, we present implications of data aggregation in forecasting and planning activities, as well as provide a methodology to segment SKU's for prioritization during forecasting and planning. While in the Forecast Models section, we explore various forecasting models applied during different stages of the product lifecycle, and utilize these models under "least error" selection with sales data at different levels of aggregation to determine which combination results in the most accurate forecast. Moreover, in the Planning Process section, we explore the Sales and Operations Planning methodology, and provide a set of best practices to design a planning process that meets the requirements of "Company X". Lastly, in the Organizational Behavior section, we depict the "Company X's" planning process and organization, and highlight some of the behaviors typically observed during forecasting and planning activities. Although most of the proposed components provided forecasting and planning improvements over the legacy method, not all of these were implemented at "Company X". Nevertheless, the implemented improvements provided a forecast error reduction from 17% to 10% over the life of the project. However, these improvements were not equal for all SKU segments, as B segment SKU's, or medium criticality products, benefited the most from the execution of this project.
by Daniel Antonio Uriarte.
S.M.
M.B.A.

The Fast Moving Consumer Goods (FMCG) industry consists of a large part of our daily purchases making it to an important industry for the society. Within every industry, operational control and supply chains are important success factors regarding efficiency and profitability. Lately, much attention towards sustainability within the industry has been given, due to environmental and to ethical concerns. The whole industry will be forced to undergo major changes in order to remain and to become sustainable. Therefore, operational control and supply chains need to be effective and sustainable in order to sustain this transformation. In this project, an investigation regarding if Lean production and sustainable supply chains can apply to the FMCG industry is conducted. Difficulties with achieving levelled production and factors to attend to in order to become sustainable will be addressed. A literature review about Lean management and sustainable supply chains will be presented. Furthermore, two case studies will be conducted at two beverage companies where a comparison between theory and reality will be conducted. We found that many of the Toyota Production System (TPS) principles can be hard to implement in the FMCG industry. Therefore, Lean production is not easily obtained within the FMCG industry. Specifically, we found that beverage companies have difficulties obtaining levelled production and implementing production levelling tools suggested in TPS. We found that measures conducted in order to level production mainly focus on optimization of internal processes and shortening of lead times upstream. Work to obtain control over demand management has been done on order to facilitate levelling of the production. Therefore, work to be conducted in order accomplish demand managementis suggested as a recommendation in this report. This recommendation contains factors such as: order placement, lead times pricing and campaigns. Several factors suggested in Sustainable Supply Chain Management literature in order to obtain sustainable supplychains were found in our case studies. We found that information exchange between customer and producer is not optimal. Furthermore, we found that high standards regarding suppliers generally result in that only large suppliers can meet these standards. Thus, making it harder to influence aspects regarding sustainability among suppliers. In closing, the FMCG industry have potential to achieve sustainable supply chains, but some factors remain to be improved.
Fast Moving Consumer Goods (FMCG) industrin utgör de produkter som konsumeras på daglig basis, vilket gör den till en viktig industri för konsumtionssamhället i stort. Inom alla industrier utgör styrning av interna processer och försörjningskedjor viktiga framgångsfaktorer gällandes effektivitet och lönsamhet. Senaste tiden har det riktats mycket uppmärksamhet mot hållbarhets- och etiska aspekter inom hela industrin. Många intressenter menar på att alla industrier måste ändras för att industrin som helhet ska överleva och bli hållbar. Därför måste interna processer och försörjningskedjor anpassas för att stödja transformationen mot hållbarhet. I detta projekt undersöks ifall Lean produktion och hållbara försörjningskedjor kan anpassas till FMCG industrin. Vi kommer särskilt diskutera de svårigheter som finns med att uppnå utjämnat produktionsflöde och faktorer som är viktiga att åtgärda för att erhålla hållbarhet inom förädlingskedjan. En litteraturstudie kring Lean och hållbara försörjningskedjor kommer att utföras. Vidare kommer två fallstudier på två dryckesföretag att genomföras där en jämförelse mellan teori och verklighet kommer ligga tillgrund för våra slutsatser. De upptäckter vi gjorde under arbetet var att många av de fundamentala Lean-principer(TPS) som Toyota introducerar är svåra att uppnå inom FMCG-industrin. Mer specifikt fann vi i våra fallstudier att uppnå ett jämnt produktionsflöde tillhör en av de största svårigheterna inom dryckesindustrin. Vi upptäckte att det arbete som utförts för att uppnå ett jämnt produktionsflöde mestadels fokuserade på att förbättra interna processer och ledtider uppströms i försörjningskedajan. Arbete kring att kontrollera efterfrågan i syfte att utjämna produktionen har gjorts. I rapporten föreslås områden att undersöka för att bättre styra efterfrågan i form av en rekommendation. Denna rekomendation innehåller faktorer som: orderingång, prisättning av leverans och kampanjer. Flertalet av de hållbarhetsfaktorer som läggs fram i litteraturen kring hur man erhåller hållbara försörjningskedjor återfanns i våra fallstudier. Vi fann att faktorer som informationsutbyte mellan kund och producent inte är optimalt. Vidare utgör höga krav på leverantörer att generellt sett stora leverantörer blir de enda som möter uppsatta krav. Detta försvårar möjligheter att påverka leverantören. I detta fall, påverkan kring hållbarhetsaspekter. FMCG industrin har stora möjligheter att erhålla hållbara försörjningskedjor, men några faktorer återstår att förbättra. Dessa faktorer kommer diskuteras i rapporten.

This study develops a holistic framework for the control system of supply networks (CSSN) from the perspectives of control processes, control mechanisms and variations of the control systems. It structures and integrates existing knowledge on supply chain management, production operations and network governance, updates cybernetics control concepts for the environment of supply networks, and provides guidance for practitioners to design and evaluate the control systems for their supply networks. Recently, the increasingly tight cooperation of companies and supply networks has called for effective ways to manage the network. Traditional management control has focused on organizational control, based on hierarchical and authoritative motivations. However, in network organization, classic control methods fail to deliver desirable results. Theories on networks and supply chains also lack in-depth discussion of an integrated solution package. This research fills the gap of literature and practice by proposing a loop model embedded with control mechanisms which link all the elements in the supply networks. This research also proposes a new classification for supply networks which matches corresponding control systems. The primary findings of this study are that: The basic components of CSSN are the “control procedures”, i.e. planning – feedback – adjustment; The crucial components of CSSN are the “control mechanisms” that support and complement control procedures. They include operational mechanisms (amplifiers, collectors, filters and action selectors) and configurational mechanisms (transformers); and The four types of supply networks, i.e. organic, parental, bureaucratic and mechanistic networks, correspond to their own control systems, which are the variations of the generic CSSN model.

Penelitian ini bertujuan untuk menganalisis secara simultan dan parsial pengaruh Likuiditas, Leverage, Pertumbuhan Penjualan, Kepemilikan Institusional, dan Komisaris Independen terhadap Financial Distress sektor Consumer Goods Industry (CGI) yang terdaftar di BEI pada Periode 2016-2018. Metode sampling yang digunakan dalam penelitian ini adalah metode purposive sampling yaitu metode pengambilan sampel sesuai kriteria tersebut. Perusahaan yang mencapai kriteri daam penelitian ini sebanyak 11 perusahaan Consumer Goods Industry (CGI) di BEI pada periode 2016-2018. Analisis yang digunakan yaitu analisis regresi data panel untuk melihat pengaruh variabel independen terhadap variabel dependen baik secara bersama-sama aupun secara individu yang didahului oleh uji asumsi klasik yaitu uji chow, uji hausman, dan uji lagrange multipier. Pengujian hipotesis dilakukan dengan menggunakan uji F, uji R-Squared dan uji T. Hasil penelitian ini memberikan informasi bahwa Leverage, Pertumbuhan Penjualan, Kepemilikan Institusional, dan Komisaris Independen tidak berpengaruh signifikan terhadap Financial Distress pada perusahaan Consumer Goods Industry (CGI) yang terdaftar di Bursa Efek Indonesia (BEI), sedangkan Likuiditas berpengaruh signifikan terhadap Financial Distress pada perusahaan Consumer Goods Industry (CGI) yang terdaftar di Bursa Efek Indonesia (BEI).

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%.