Academic literature on the topic 'Price basis'

This article examines price regulation with its various objectives, forms and contexts. Navigating through the economic literature (that shows price regulation as a futile exercise for controlling inflation and solving commodity scarcity), the article analyses the constitutional foundations and the legislative enactments that authorize price regulation in Ethiopia. While there is a strong legal authority under the Constitution to regulate prices, there is lack of detailed standards to distinguish between the proper and improper exercise of price regulation power. Distinction is made between price regulation in normal times vis-à-vis price regulation during emergencies, and I argue that price regulation during emergencies should be evaluated against separate standards. With regard to price regulation in normal times, the recently enacted administrative procedure proclamation may help in solving the lack of standards.

Agricultural prices play greater role in living Economics. Since many decades’ farmers faced declining agricultural prices and low prices in developing countries. Therefore, in these countries agricultural price policies are under closer appraisal. Government and policy makers worry about inflation. Economic precision is required in determining prices. This understanding led to conception of the study. The specific objectives are to review various agricultural price theories, research evidences and construct the theory of agricultural price bubble and crash and their effect on macro economy and suggest measures to improve. The study reviews various agricultural price theories, concepts, policies, research gaps and do meta-analysis and formulated the theory of Agricultural prices bubble and price crash. Since 1950, many development economists and practitioners prophesy in developing countries is that low agricultural commodities prices discourage poverty alleviation. Many countries are unable to make successful pricing policies due to there is not enough operative methodological and theoretical support for decision-making. According to the economic theory of cooperativism, the entities come closer to the pecking order theory. Unexpected changes and changes in regulations can have significant impact on the profitability of farming activities. “Demand channel" is the crucial factor in elucidation of commodity price growth. Future prices moments in agriculture have fat-tailed distributions and display quick and unpredicted price jumps. World Trade Organization study highlights the importance of strengthening multilateral disciplines on both import and export trade interventions to food price fluctuations to reduce beggar-thy-neighbor unilateral trade policy. The theory of NAFTA regionalism did not lead to regionalization and not increasing share of intraregional international trade. In EU countries land rents in modern agriculture causing upward trend in agricultural land prices. Information friction, agricultural supports, agricultural price & trade policies, agricultural price transmission are responsible price fluctuations. In economic theory, asymmetric price transmission has been the subject of considerable attention in agricultural gaps. Selection of forecasting models are based on chaos theory. Chaos in agricultural wholesale price data provides a good theoretical basis for selecting forecasting models. This theory can be applied to agricultural prices forecasting. Novelties in agricultural products fluctuations research offer scientific basis in planning of agricultural production.

On the basis of rationality evaluation index of housing price, the main influencing factors of housing price were proposed. Through the analysis of 2004-2013 Xiangtan land prices, housing price, construction costs and taxes and other factors, it is concluded that the four main factors that affect Xiangtan City’s housing price are land prices, housing supply, construction costs and taxes.

The paper analyses the impact of the input-output price policy in agriculture on producers and consumers. Trends in prices cause immense resource transfers from agriculture. with adverse consequences for investment, output, employment, and income distribution. To the extent that these transfers accrue to industrialists and the government, the poorest benefit the least. These deleterious effects can be minimised by assured world prices for agriculture and restoration of true competition in agricultural commodity and input marlcets. In agricultural input marlcets, elimination of corruption; excessive profiteering and overstaffing should serve as the basis of a cost reduction strategyand removal of input subsidies. In the specific case of irrigation water, equitable distribution, compatibility of water rate assessment and water supply bases, and elimination of overstaffing are the prime issues deserving immediate government attention.

LNG is often sold under long-term contracts with strong volume commitments from both sides, and a cost linked to the oil price. In volatile commodity markets, parties are under pressure to try to review the price under the agreement, either on the basis of price review clauses, hardship clauses, or by relying on general legal principles. This leads to great commercial and legal challenges for both buyers and sellers. The experience in Europe with gas price reviews can be a source of knowledge for companies on how to deal with price reviews. Long-term gas contracts in Europe also used to be linked to oil prices. This led to a great number of price reviews when oil prices started to soar as of 2005. After that, a new wave of price reviews arose when gas prices decoupled from oil prices in 2009. European gas companies are still dealing with the resolution of those reviews. On the basis of a number of case studies, this extended abstract sets out the key points that have been learned from a decade of price reviews in Europe with a focuses on practical advice for commercial and legal decision makers. It discusses how negotiations on price reviews are best approached; whether parties should voluntarily disclose confidential information about prices (also in view of competition law), and how arbitrators deal with a gas price review.

The financial outlook for the Canadian gas industry depends on the outlook for gas prices at Canadian producing basins, the cost of producing in Canada and the volume of production of Canadian natural gas. Price, cost and volume determine the health of the Canadian industry. Industry's costs are the basis of the supply (volume) offered on the market and price is determined by the interaction of supply and demand.

Abstract The article is a voice in the debate on the scope of the application of statistical methods in real estate appraisal, written from the comparative perspective. It presents the results of an illustrative valuation of housing units with the use of databases of various sizes, constructed on the basis of publicly available data from the register of property prices and values. Against this background, the article presents an analysis of differences between the objectives and published results of valuations, which exemplify broadly understood property price modelling or property value modelling, as well as of activities focused around appraising a specific object. The conducted experiments demonstrated that, for the purposes of real estate appraisal itself, the selection of data is more useful than searching for a price model.

This paper conducts an empirical analysis to examine the tax effect on the basis (the difference between the futures price and the cash price) of KOSPI200 stock-index futures. The standard cost-of-carry model relies on a simple non-arbitrage argument in which a trader replicates a “synthetic bond” with short in the futures and long in the underlying basket of cash stocks. While the synthetic bond provides the same or similar economic profiles as a normal interest-bearing instrument, the tax treatment for each is different under Korean tax code. The implicit taxes are expected to lower the before-tax rate of return on the synthetic bond, and thus to shrink the size of the basis. The analysis indicates that implicit taxes are reflected and thus priced in the basis of KOSPI200 stock-index futures.

The main task of development of economy at the present stage is to fully improve the production efficiency and the sustainable occupation of positions of enterprises on the domestic and international markets. To withstand the intense competition and win the trust of customers, the company has to favorably stand out against the enterprises of the same type. It is well known that the consumer is interested in quality and price of products. The higher the quality and lower the price, the better and more profitable for the buyer. These indicators and enclosed in the cost of production. Prime cost is the basis of determination of product prices. Systematic reduction of production costs is one of the basic conditions of increase of efficiency of production. It has a direct impact on the amount of profit, level of profitability.

The price of land is an important matter that needs to be assessed by stakeholders. The study of land prices has an important role in seeing the stability of the property market. Several factors affect the property business such as accessibility, public facilities and social facilities. Utan Kayu Selatan is the largest village in Matraman Sub-District with an area of ​​1,12 kilometers. The potential of the property business is very tempting for investors to property developers. One of the economic sector developments is Utan Kayu Raya Road, which can increase land prices in the surrounding area. The factors that influence land prices can be analyzed through several approaches such as regression, mass appraisal and other. In this study, the method used in estimating land prices is the Radial Basis Function (RBF), by looking at the relationship between the distance of plot to roads, public facilities and social facilities. Modeling is carried out based on samples determined on ZNT and NJOP land prices. Furthermore, the calculation of the distance is done by using network analysis. As a result, the RMSE value for the NJOP RBF model and the ZNT RBF model is IDR 1.179.839 and IDR 2.972.345. Meanwhile, the CoV values ​​for both models were 6.2% and 6%. In the comparison of ZNT price predictions with market prices, the highest difference is IDR 13.119.915 and the lowest difference is IDR 537.009. While on the NJOP price prediction, the highest difference is IDR 15.797.583 and the lowest difference is IDR 291.270.

The 1996 and 2002 Farm Bill changes in milk support price legislation deregulated the market and milk prices are more volatile than ever. The use of a mechanism to reduce farmers' exposure to volatile milk prices has therefore become essential. This study evaluates the impact of two hedging strategies, one conservative and the other an intermediate one (more sophisticated). Optimal parameters for the two strategies are searched over a period of 5 years. Then, the performance, in terms of increased profitability and reduced variation, is assessed and the best performer is chosen and applied to an out-of-sample dataset. With the in-sample data, both strategies generate higher mean monthly profits than with the no-hedging option. Comparison of both strategies indicates that the intermediate strategy outperforms the conservative one in terms of higher profitability and lower variance. Out-of-sample results confirm the findings of the in-sample results. The additional profits and the reduction in volatility can make the difference between keeping a farm profitable and bankruptcy.
Master of Science

This study is based on three models, Markov model, Hidden Markov model and the Radial basis function neural network. A number of work has been done before about application of these three models to the stock market. Though, individual researchers have developed their own techniques to design and test the Radial basis function neural network. This paper aims to show the different ways and precision of applying these three models to predict price processes of the stock market. By comparing the same group of data, authors get different results. Based on Markov model, authors find a tendency of stock market in future and, the Hidden Markov model behaves better in the financial market. When the fluctuation of the stock price index is not drastic, the Radial basis function neural network has a nice prediction.

Beef cattle and calves are raised in all areas of the United States. Since beef cattle are scattered throughout the US, there are many different types of cattle with numerous different quality characteristics which are valued differently. Many calves raised until weaning age across the US are then sent to cattle feeding areas primarily located in Texas, Kansas, Colorado, and Nebraska. The prices that are offered for beef calves vary considerably based on quality and location. The theory of the law of one price suggests that prices in areas that trade should not differ by more than the cost of transportation. Implicit in the law of one price is that the product is homogenous in nature which is not the case with beef cattle. To test the law of one price, prices in the feeder cattle markets that trade should be equal after those prices have been adjusted for the cost of transportation and for differences in quality. Consequently, the objective of this thesis is to adjust prices for transportation costs and quality characteristics to determine if the law of one price holds in the US feeder cattle market. Data for this dissertation were obtained from Superior Livestock Auction in Brush, Colorado. The original data set included over 30,000 cattle lots sold throughout the entire US from 2004-2006 which includes valuable information such as price, breed, sex, number of head, days to delivery, location of sale, and destination of sale for each cattle lot. However, the data were narrowed to examine price and quality for weaned steer and heifer calves in the fall. This narrowed data set still contained 9,570 cattle lots which includes, specifically, steer and heifer calves, weighing between 450-700 pounds, and delivered in October and November. In order to determine if the law of one price holds for feeder cattle, first, a Hedonic regression analysis was used to determine the value of selected cattle, lot, and market characteristics. Second, the cost of transportation was calculated by figuring freight rates and animal shrinkage. Prices were then adjusted for freight rates and shrinkage values and for quality differences to determine if prices were equivalent across regions of the US and across states within a specific region of the US. Results from the Hedonic model showed that most cattle characteristics yielded expected results, and that there are differences in quality characteristics in cattle which affect the price. Further results revealed that the transportation adjusted prices varied by more than transportation costs, and that when adjusted for transportation costs, price were not the same across regions of the country. In combining quality characteristics and transportation costs, results also revealed that prices were different by region and by states within a region. Thus, based on the results from the data, it does not appear that the law of one price is upheld in the US feeder cattle market. The implications of the results are that there may be opportunities for arbitrage in feeder cattle markets. The results also indicate that cattle producers who are more distant from major cattle feeding areas receive prices for their calves that are higher than would be justified based on transportation costs and that producers who are closer to major cattle feeding areas receive prices for their calves that are less than should be expected based on transportation costs.

Kentucky plays a vital role in the beef supply chain. The cow/calf producers,back-grounding operations, and order buying industry are important parts of Kentucky'sagricultural economy. Basis risk is an issue that affects these groups in a negative way. Agood estimate of the expected basis must be available to make hedging efficient.Simulations were performed on Kentucky price data to determine the effectiveness ofshort hedging for Kentucky producers. A model was also used to describe some of thefactors that determine basis levels. The research revealed that it is difficult to predictbasis within an acceptable range to make short hedging with futures efficient. Eventhough short hedging reduced variability in net price, it was difficult to lock in a profit.Various options and spread strategies were presented as alternative hedging tools thatwould protect cattle producers from unexpected price declines.

This research quantifies specific cash price premiums and discounts associated with various characteristics of slaughter cattle in Virginia. Econometric models of Virginia slaughter cattle basis were developed for each practical combination of sex and market by differentials in weight, grade, breed, lot size, order of sale of a particular lot, number of cattle in a particular sale, and a seasonal indicator based on the Chicago Mercantile Exchange (CME) live cattle futures contract month. Explanatory models were found to account for 41 to 64 percent of the variation in slaughter cattle basis for steers and 35 to 47 percent of the variation in slaughter cattle basis for heifers. Results explain over 30 percent more of basis variation than previous research. These basis estimates reduce basis error and hedging risk and potentially offer Virginia cattlemen the means to initiate effective slaughter cattle hedging programs. Furthermore, the implementation of a forward pricing agency which uses estimated basis values may provide alternatives to facing basis risk when selling slaughter cattle in Virginia. An analysis of basis risk provides some indication of the magnitude of possible exposure facing the average Virginia cattleman when making hedging decisions based on estimation procedures as defined herein. The formation of a forward pricing agency should be contingent upon further analyses of basis risk as outlined in this research. Investigation of basis estimate residuals concluded that more variability is present as time to contract maturity increases. This information should prove valuable for those involved in trading options on live cattle futures as options expire one month prior to their respective futures contracts.
Master of Science

Study project (MBA)--University of Stellenbosch, 2003.
ENGLISH ABSTRACT: In a rational efficiently functioning market, the price of the share index and share index futures contracts should be perfectly contemporaneously correlated. According to the cost of carry model, the futures price should equal its fair value at maturity. The basis should be equal to the cost of carry throughout the duration of the futures contract. However, in practice the cost of carry model is obscured and the basis varies and is normally not equal to the cost of carry. Reasons for this variability in basis include the mark-to-market requirement of the futures contract, the differential tax treatment of spot and futures contracts, as well as the transaction cost of entering into a contract. Transaction costs are lower for futures contracts than for spot contracts. This study uses the Chen, Cuny and Haugen (1995) model to examine the relationship between the basis and volatility of the underlying index and between the open interest of the futures contract and the volatility of the underlying index. Chen et al. (1995) predicted that the basis is negatively related to the volatility of the underlying index and that the open interest is positively related to the volatility of the underlying index. The study will also test the statement by Helmer and Longstaff (1991) that the basis has a negative concave relationship with the level of interest rate. The tests were performed on data from ALSI, FINI and INDI futures contracts. The sample period was from January 1998 to December 2001. The results correspond to those obtained by Chen et al. (1995) in that the basis is negatively related to the volatility of the underlying index. This is true for all the three indices. The other main prediction of the Chen, Cuny and Haugen (CCH) model (1995), which is also supported by the study, is that open interest is significantly related to the volatility of the underlying index. The study also supports the statement by Helmer and Longstaff (1991) that the there is a highly significant negative concave relationship between the basis and interest rate.
AFRIKAANSE OPSOMMING: In "n mark wat rasioneel funksioneer, behoort die prys van die aandele-indeks en aandele-indekstermynkontrakte perfek gekorreleer te wees in tyd. Volgens die drakostemodel behoort die termynkontrakprys op die vervaldatum gelyk te wees aan die billike waarde daarvan. Die basis behoort vir die looptyd van die termynkontrak gelyk te wees aan die drakoste. In die praktyk word die drakostemodel egter vertroebel en wissel die basis en is dit gewoonlik nie gelyk aan die drakoste nie. Redes vir hierdie veranderlikheid van die basis sluit in die waardasie teenoor markprys van die termynkontrak, die belasting van toepassing op loko- en termynkontrakte, asook die transaksiekoste by die aangaan van "n kontrak. transaksiekoste vir termynkontrakte is laer as vir lokokontrakte. Hierdie studie gebruik die model van Chen, Cuny en Haugen (1995) om die verwantskap tussen die basis en die volatiliteit van die onderliggende indeks en tussen die oop kontrakte van die termynkontrak en die volatiliteit van die onderliggende indeks te ondersoek. Chen et al. (1995) voer aan dat daar 'n negatiewe verwantskap is tussen die basis en die volatiliteit van die onderliggende indeks en dat daar "n positiewe verwantskap is tussen die oop rente en die volatiliteit van die onderliggende indeks. Die studie toets ook Helmer en Longstaff (1991) se hipotese dat daar 'n negatiewe, konkawe verhouding tussen die basis en die rentekoersvlak bestaan. Die toetse is uitgevoer op data van ALSI-, FINI- EN INDItermynkontrakte. Die steekproef was van Januarie 1998 tot Desember 2001. Die resultate stem ooreen met dié van Chen, Cuny en Haugen (1995) se model (CCH-model) in dié opsig dat daar "n negatiewe verband is tussen die basis en die volatiliteit van die onderliggende indeks. Dit geld vir al drie die indekse. Die ander hoofresultate van Chen et al. (1995), wat ook deur die studie ondersteun word, is dat daar "n beduidende verband tussen die oop kontrakte en die volatiliteit van die onderliggende indeks bestaan. Die studie ondersteun ook Helmer en Longstaff(1991) se siening dat daar 'n beduidende, negatiewe, konkawe verhouding tussen die basis en die rentekoers bestaan.

The thesis is focused on creating of aggregated items and pricing appreciation of the group works. This thesis deals with in its early life cycle of building works and defines at what stage it is advisable to use the aggregate cost. The following part is aimed at budget in the aggregated prices and creating aggregated prices. In practical part there is methodology designed to compile aggregate price of building construction. The aim of methodology is to propose evaluation process of coherent construction work groups. The proposed methodology will be used to value case study of family house.

The aim of my diploma thesis is to prepare documents for price calculation and determination of the common rent in the suburb of Brno - Žabovřesky. In this work, I used information from executed leases Realtors Matras&Matras & Real Estate Ltd. and Dvorak. Analysis of factors affecting price formation I have devoted the factors that I considered at that locality as valid for determining the price and verifying their influence on rental prices. I added my own factor into the monitored critical factors. This factor is noise. As the analysis results showed it was a major factor that significantly affects the final price of the lease. His inclusion among the decisive factors was correct. By setting standards and calculation of coefficients, I obtain results that helped determine the normal cost of rent and contributed to the view of the importance of determining the level of the individual factors to calculate the final rental price. Data collection, analysis and examination of the relationships between the key factors, I see as a guide for calculating the normal price, which will be used by districts and the real estate market.

The monograph presents conceptual approaches and practical recommendations for the formation of a system for monitoring pricing processes in the economy. The main idea of creating such a system is to ensure the transparency of pricing processes, the exclusion of price manipulation practices, and the implementation of the principle of fair business conduct. The presented research examines the problems of setting final prices in the economy on a systematic basis: from an institutional point of view, economic practices, features of legal regulation and information support of pricing processes in the economy are described. On the example of a large amount of factual material, the inconsistency of purely market relations and the risks that arise in this case are shown, the need for monitoring pricing processes is proved. For a wide range of readers interested in the nature of pricing processes in methodological and practical aspects.

AbstractHow SMEs dealt with the trade-offs between functionality, design, and ergonomics to compensate for a high-cost production basis and offering customers a competitive in-use price is key to their overall competitiveness. Design for durability is an important practice as it decreases in-use costs over time and offsets higher acquisition costs. For marketing success, design flair can be used to enhance the product appearance and looks. A very important element is the ergonomics and ease of use of a product as this can both reduce in-use costs and make the higher price tag the most efficient solution after all. The chapter ends with a discussion of the more recent concept of design thinking and how some of the Swiss SMEs have applied this idea well before the term became fashionable.

The goal of price optimization is to maximize total revenue by adjusting the prices of products, on the basis of predicted sales numbers that are functions of pricing strategies. Recent advances in demand modeling using machine learning raise a new challenge in price optimization, i.e., how to manage statistical errors in estimation. In this paper, we show that uncertainty in recently-proposed prescriptive price optimization frameworks can be represented by a matrix normal distribution. For this particular uncertainty, we propose novel robust quadratic programming algorithms for conservative lower-bound maximization. We offer an asymptotic probabilistic guarantee of conservativeness of our formulation. Our experiments on both artificial and actual price data show that our robust price optimization allows users to determine best risk-return trade-offs and to explore safe, profitable price strategies.

A hybrid wet-dry cooling system can be designed for a large combined-cycle power plant. A well-designed hybrid cooling system will provide reasonable net generation year-round, while using substantially less water than a conventional wet cooling tower. The optimum design for the hybrid system depends upon climate at the site, the price of power, and the price of water. These factors vary on a seasonal basis. Two hypothetical power plants are modeled, using state-of-the-art steam turbines and hybrid cooling systems. The plants are designed for water-constrained sites incorporating typical weather data, power prices, and water prices. The principles for economic designs of hybrid cooling systems are demonstrated.

The gold which is the most important metal known since seven thousand years and is located in the first place among the precious metals protects being the saving mean. Gold increasingly preferred in industry due to the technological purposes, and because of its mentioned specifications creates the significant price fluctuations within its specific market structure. In this study, the basic national factors effecting the gold market in Turkey were tested in terms of empiric. Weighted average gold prices used as a dependent variable; whereas basket exchange rate, BIST 100 index, deposit interest rate and inflation rate used as an independent variable. The data related to these variables were dealed on a monthly basis, between the years of January 1999- December 2014. Taking the advantage of the e-views package program, multiple regression model was performed in the analysis. In the final result of the analysis, the impacts of all independent variables but BIST 100 index values, on gold market prices were statistically found to be significant.

Abstract Crude oil, a base for more than 6000 products that we use on a daily basis, accounts for 33% of global energy consumption. However, the outbreak and transmission of COVID-19 had significant implications for the entire value chain in the oil industry. The price crash and the fluctuations in price is known to have far reaching effect on global economies, with Nigeria hard. It has therefore become imperative to develop a tool for forecasting the price of crude oil in order to minimise the risks associated with volatility in oil prices and also be able to do proper planning. Hence, this article proposed a hybrid forecasting model involving a classical and machine learning techniques – autoregressive neural network, in determining the prices of crude oil. The monthly data used were obtained from the Central Bank of Nigeria website, spanning January 2006 to October 2020. Statistical efficiency was computed for the hybrid, and the models from which the proposed hybrid was built, using the percent relative efficiency. Analyses showed that the efficiency of the hybrid model, at 20 and 100 hidden neurons, was higher than that of the individual models, the latter being the best performing. The study recommends urgent diversification of the economy in order not for the nation to be plunged into a seemingly unending recession.

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%.

Since April 2016, The European Union and the Oxfam Pro-Resilience Action Project in Kebbi and Adamawa States, Nigeria, have supported poor smallholder rural farmers to improve their agricultural productivity. The project has a specific focus on increasing crop yields per hectare for better land usage, as well as ensuring farmers possess the skills they need to maintain good agricultural practices, such as inputs utilization and climate mitigation strategies, as well as an information-sharing system on weather and market prices. The project uses a Farmer Field School model that continues to serve as a viable platform for rural farmers to access hands-on skills and basic modern farming knowledge and techniques. The case studies presented here demonstrate a significant increase in farmers’ productivity, income and resilience. This approach should be emulated by governments and private sector players to achieve impact at scale in Nigeria’s agricultural sector, which is the country’s top non-oil revenue stream.