Добірка наукової літератури з теми "Weak housing markets"

In this article, a threshold cointegration test within the framework of Autoregressive Distributed Lag model suggested by Li and Lee (2010) was employed to quantify the wealth effects in Chinese stock market and domestic housing market. The time-varying features of wealth effects in these two markets were investigated through rolling regression test. The empirical results show that the substitute effect exists in the status of strong market while the wealth effect exists in the status of weak market. It is noteworthy that the wealth effect in the stock market shows an increasing trend while the wealth effect in the housing market reveals a stable trend. The policy implication is that the authority should properly strengthen the regulation in the stock market and curb the rise of housing price when the markets are in the strong status while should increase the disposable income for residents if the markets are in the weak status.

The advent of the millennium witnessed unparalleled volatility in the housing market, a cycle of bust and recovery to which some US neighbourhoods were resilient and others not. Most planning scholars interested in resilience have paid little attention to examining the resilience of the housing market to economic shocks at the neighbourhood level across the USA. Using cluster analysis and hierarchical linear models, together with changes in housing prices, this study examines patterns and drivers explaining neighbourhood resilience within the context of metropolitan housing markets over periods of housing boom, bust, and recovery. Findings suggest that neighbourhood and metropolitan factors associated with housing market resilience varied across space and time: housing and mortgage market conditions affected neighbourhood recovery in the relatively short term while most urban form variables affected recovery over the long term. In addition, the associations and recovery patterns varied among the types of metropolitan areas, showing that neighbourhoods in strong markets had more drivers of resilience and reverted to their original status more quickly than those in weak markets, highlighting the growth of regional housing disparity during the housing recovery. Across the nation, however, home values in neighbourhoods that experienced more extreme periods of boom and bust underwent short-lived depreciation during the recession but long-term appreciation. This study should help policy makers establish sound policies that stabilise neighbourhoods and prevent future downturns.

New housing completions constitute a considerable share of the overall housing supply in Chinas current urban housing markets. We argue that large-scale new housing developments significantly increase energy consumption in the long run, thereby increasing energy prices. The aim of this study is to examine the effect of supply-side housing variables rather than demand-side housing variables on energy prices in Beijing. Supply-side housing variables include level variable (floor space) and growth variable (changes in floor space). We investigated their respective effects on energy prices. We tested for cointegration, Granger causality and weak exogeneity. Tests indicated that new housing completions exerted a positive long-term effect on energy prices. Hence, new housing development needs to improve energy efficiency.

The financial crisis that began in 2007 was triggered by over-leveraged homeowners and a severe downturn in US housing markets. However, a reasonably well-supervised financial system would have been much more resilient to this and other types of severe shocks. Instead, the core of the financial system became a key channel of propagation and magnification of losses suffered in the housing market. Critical financial intermediaries failed, or were bailed out, or dramatically reduced their provision of liquidity and credit to the economy. In short, the core financial system ceased to perform its intended functions for the real economy at a reasonable level of effectiveness. As a result, the impact of the housing-market shock on the rest of the economy was much larger than necessary. In this essay, I will review the key sources of fragility in the core financial system. I discuss the weakly supervised balance sheets of the largest banks and investment banks; the run-prone designs and weak regulation of the markets for securities financing and over-the-counter derivatives; the undue reliance of regulators on “market discipline; and the interplay of too-big-to-fail and the failure of market discipline. Finally, I point to some significant positive strides that have been made since the crisis: improvements in the capitalization of the largest financial institutions, a reduction of unsafe practices and infrastructure in the markets for securities financing and derivatives, and a significantly reduced presumption that the largest financial firms will be bailed out by taxpayer money in the future. But I will also mention some remaining challenges to financial stability that could be addressed with better regulation and market infrastructure.

Abstract Unequal income distribution in Latin America and the Caribbean is linked to unequal distributions of human and physical assets and differential access to markets and services. These circumstances, and the accompanying social tensions, need to be understood in terms of traditional fragmenting forces; the sectors of the population that experience unfavorable outcomes are also recognized by characteristics such as ethnicity, race, gender, and physical disability. In addition to reviewing the general literature on social exclusion, this article surveys several more specific topics: relative deprivation (in land and housing, physical infrastructure, health and income); labor market issues, including access to labor markets in general, as well as informality, segregation, and discrimination; the transaction points of political representation, social protection, and violence; and areas in which analysis remains weak and avenues for further research in the region.

Many comparative studies of home-leaving examine behavior associated with this transition and the relative importance of both structural and cultural factors in helping or hindering it. Yet, we know surprisingly little about how youth understand these factors on a broad scale to be influencing home-leaving for their generation. This article compares young people’s beliefs across cultures about why late home-leaving occurs using Eurobarometer survey data from 28 countries. I incorporate comparative home-leaving literature with theories about attitudinal worlds of welfare and explanations for social problems to argue that modes of explanation for late home-leaving hinge on whether youth see external, structural causes preventing earlier leaving (constraint-oriented explanations) or internal, more culturally motivated causes that lead individuals to stay at home longer (choice-oriented explanations). Demographic and institutional conditions that capture aspects of nations’ home-leaving contexts, such as women’s mean age at childbirth and the robustness of labor and housing markets, significantly correlate with the prevalence of these explanations. Findings suggest that youth tend to perceive their generation’s housing exits as structurally limited by scarce housing and weak purchasing power. However, in richer countries with more effective employment markets and better access to rental housing stock, choice-oriented explanations are more popular.

Purpose The purpose of this paper is to study the effect of the 2008 global financial crisis on housing market dynamics in an emerging economy like India using quarterly data (Q4 2008–2009 to Q1 2018–2019). The study explores the extent of linkages between housing prices, monetary policy and financial stability by explaining the nature of the shocks to the housing sector and the degree of impact of those shocks; the possibility of adverse feedback loop which is beyond the natural levels; and the usefulness of explicit and direct role of monetary policy for the housing market stability, which was the loudest demand immediately after the crisis. Design/methodology/approach The paper follows a three-step methodology: data transformations, a variable selection process “general-to-specific modelling” with the help of OxMetrics 6 Package, and vector autoregressive modelling with the help of EViews 10. F-test was used to describe the short-term relationships between the variables. Impulse response and variance decomposition were used to explain the type of relationship (negative or positive) and the period of the relationships, respectively. Findings The study finds that the housing sector is sensitive to the monetary policy shocks, whereas the contribution of the housing market shocks to the fluctuations in other market variables is not substantial, though not negligible. As far as the nature of the shocks is concerned, the observed dynamics in the real house prices are diverging from their fundamental levels. The housing market shocks are more or less static; it rules out the chances for a self-reinforcing feedback loop with the existing setup. Research limitations/implications The study concludes that the observed dynamics in the real house prices are diverging from their fundamental levels. Given the limitation, the researchers could extend this study by decomposing the part of the risk to the sector contributed by the other drivers, which may be inherent imperfections in housing markets, weak and unreliable wealth effect, and the presence of behavioural biases. Practical implications The present study finds countercyclical measures to be more useful for this sector as compared to the forward-looking monetary policy reforms in this sector. The central bank in India should continue to refrain from responding directly to the housing sector fluctuations. Investors can enjoy investing in the housing sector without any fear of the crisis as of now. The effect of speculation is small but not negligible, which enjoins the investors and the policy-makers to remain watchful. Interest rate, money supply and inflation lead (Granger-cause) the housing prices. This information is relevant for spending and investment decisions. Social implications The study feels that banks should avoid using monetary policy to balance the house prices. This will be beneficial both for the economy and the society, as any change in monetary policy to especially curb out surging housing prices may adversely affect the output, and finally, may lead to the deflation. The fear of deflation may cause devastating economic, financial and social effects. Originality/value The study contributes to the literature by shedding some new insights about the interrelationship between macroeconomic variables, housing prices and financial stability in the aftermath of the 2008–2009 financial crisis. Such types of studies are absent from emerging markets, particularly from India.

Purpose – The purpose of this paper is to understand the barriers to housing development on brownfield land in the UK, making clear the distinction between market and institutional factors and identify appropriate public and private sector solutions to encourage more residential development. Design/methodology/approach – In this research, the city of Nottingham in the East Midlands of England was chosen as the case study city. The research was based on secondary literature review of relevant local authority reports, Internet searches, consultancy documents and policy literature. Detailed case studies were undertaken of 30 sites in Nottingham which included a questionnaire survey of developers. Officials from Nottingham City Council assisted with the gathering of planning histories of the sites. The investigation took place in 2014. Findings – Based on the evidence from Nottingham, the most frequently occurring significant constraint was poor market conditions. At the local level, it is clear that there are options that can be promoted to help reduce the level of friction in the market, to reduce delay and cost and, thus, to encourage developers to bring forward schemes when the market allows. Securing planning permission and agreeing the terms of a S106 agreement is recognised as a major development hurdle which requires time to achieve. Practical implications – Market forces were clearly the dominant factor in hindering development on brownfield sites in Nottingham. The local authority should be more circumspect in the use of S106 agreements in market conditions where brownfield development is highly marginal. Imposing additional taxation on specific developments in weak markets discourages development and is counterproductive. Originality/value – This detailed study of 30 development sites is significant in that it provides a better understanding of the barriers to residential development on brownfield land in the UK.

In interesting times several things may happen simultaneously, and they may have connected roots. The financial turmoil that developed initially in the US banking sector had its roots in financial innovation that had made available cheap finance and increased demand for housing. This wave of low cost finance had spread to Europe, and house prices rose in a correlated way. The increase in demand in the world economy that resulted from strong growth in lending and high asset values helped raise output growth outside the OECD, and this in turn put upward pressure on oil prices. Markets sometimes work slowly, and the effects of the increase in demand on prices appear to be coming through just as the asset bubble is collapsing. The sequence of events was not inevitable, as low personal sector saving in the US and the UK as well as elsewhere could have been offset by tighter fiscal policy, and better prudential regulation of lenders would also definitely have helped. The desire to move financial regulation from the central bank, as in the UK, may have been for good, competition based, reasons, but it has meant that financial sector oversight has not taken account of the macroeconomic implications of a wave of lending that rested on risky financial innovation and therefore it has not properly addressed the issue of systemic risk (see Barrell and Davis, 2005). The resulting financial turmoil has meant that banks have made losses, and have been unable to trust each other's solvency when making deals. As a result three month interbank rates have risen well above central bank intervention rates, as can be seen in figure 1.

We use individual-level credit reports merged with loan-level mortgage data to estimate how home equity interacted with mobility in relatively weak and strong labor markets in the United States during the Great Recession. We construct a dynamic model of housing, consumption, employment, and relocation, which provides a structural interpretation of our empirical results and allows us to explore the role that foreclosure played in labor mobility. We find that negative home equity is not a significant barrier to job-related mobility because the benefits of accepting an out-of-area job outweigh the costs of moving. This pattern holds even if homeowners are not able to default on their mortgages. (JEL D14, G01, J61, R23, R31)

Bostadspolitiken i Sverige behöver förändras för att skapa jämlika förutsättningar för kommuner att kunna utveckla den lokala bostadsmarknaden och tillgodose sitt lagstadgade bostadsförsörjningsansvar. Landsbygder har andra förutsättningar än de urbaniserade städerna och flera av Sveriges landsbygdskommuner uppvisar en befolkningsminskning, låga bostadspriser och liten eller obefintlig nyproduktion. Denna studien har riktat sitt fokus till två landsbygdskommuner i norra Sverige och deras arbete med sin bostadsförsörjning. Syftet med studien är att undersöka vilka förutsättningar det finns i kommunerna Sorsele och Älvsbyn att tillgodo se sitt bostadsförsörjningsansvar. Syftet är också att visa potentiella åtgärder i den nationella politiken som underlättar för landsbygdskommuner att tillgodose sitt bostadsförsörjningsansvar.  Resultaten av studien visar på att det finns många problem som står vägen för att kommunerna Älvsbyn och Sorsele ska kunna förbättra sina bostadsmarknader. Några av problemen som framkommer är låga fastighetspriser, finansieringssvårigheter och ett sviktande skatteunderlag. Konkurrenssituationen som existerar mellan kommunerna om invånare och arbetstillfällen medför att kommuner har en tendens att planera för en ökande befolkning snarare än en minskande. Detta i sin tur skapar problem då planeringen av service och bostadsbestånd inte är anpassade utifrån rådande förutsättningar, utan snarare är anpassade för en större befolkning. På grund av sina små ekonomiska muskler har Sorsele och Älvsbyn svårt att själva vända den pågående utvecklingen. Utifrån rådande situation tvingas de lägga sina förhoppningar på extern finansiering, företagsetableringar och inflyttningar.   För att visa på alternativ till pågående utveckling för bostadsförsörjning i landsbygdskommuner har en framtidsstudie gjorts. I framtidsstudien identifieras tre scenarier med potential att nå en positiv framtidsvision och den utgår ifrån hur bostadspolitiken behöver förändras för att landsbygdskommuner med svaga bostadsmarknader ska kunna leva upp till sitt bostadsförsörjningsansvar. Framtidsstudien visar på att reformer inom bostadspolitiken, landsbygdspolitiken och skattepolitiken kan användas för att uppnå visionen. Trots att det råder osäkerhet om genomförbarheten och resultatet av olika reformer som föreslås i framtidsstudien, är en slutsats att framtidens bostadspolitik har mycket goda förutsättningar att lyckas skapa en förbättrad bostadsmarknad i landsbygdskommuner.
Housing policy in Sweden needs to change in order to create equal conditions for municipalities to develop the local housing market and meet their statutory housing supply responsibilities. Rural areas, particularly in northern Sweden, have long been disadvantaged by housing policies pursued by the government. Rural areas are in a difficult situation and several areas are experiencing population decline, low house prices and little or no new construction. As housing research tends to focus on housing policy from the perspective of an urban norm, this study has instead focused on housing policy in rural areas. The aim of this study is to investigate what conditions exist in the municipalities of Sorsele and Älvsbyn and how they are working to achieve their housing supply responsibilities. Furthermore, the aim is to examine potential national policy measures to help rural municipalities meet their housing responsibilities. The results of the study show that there are many problems that stand in the way of the municipalities of Älvsbyn and Sorsele improving their housing markets. Some of the problems identified are low property prices, financing difficulties and a shrinking tax base. Because of their small financial muscle, Sorsele and Älvsbyn have difficulty in reversing the current trend themselves. Given the current situation, they are forced to place their hopes in external financing, the establishment of companies and the arrival of new residents.  In contrast to current housing trends, a futures study has been undertaken to show alternatives to the current development of housing supply in rural municipalities. The study identifies three scenarios with the potential to achieve a positive vision of the future, based on how housing policy needs to change to enable rural municipalities with weak housing markets to meet their housing supply responsibilities. The futures study shows that reforms in housing policy, as well as fiscal policy can be used to achieve the vision.  Despite uncertainty about the feasibility and outcome of various reforms proposed in the future study, this study concludes that future housing policy has a very good chance of succeeding in creating an improved housing market in rural municipalities.

This chapter addresses how housing policies to combat segregation often fail to consider housing market strength, which varies significantly within and between metropolitan areas. In weak housing markets, policymakers should not focus on increasing the housing supply but on building market demand. This is very difficult in the weakest markets, and it often makes more sense to encourage residents to move to better neighborhoods. Housing development funds should be concentrated on “middle neighborhoods”—areas where the market is still healthy but there is a threat of decline. Middle market strategies to improve market confidence can be highly effective. By contrast, it makes no sense to invest scarce development funds in strong market neighborhoods. Instead, cities should help low-income households to stay or move into these high-opportunity areas. The chapter concludes by arguing that policymakers who embrace the build-on-strength approach advocated here need to take into account how racist practices have unfairly trapped minorities in weak market areas.

This chapter summarizes key themes and presents some final thoughts. The book has evaluated the political meaning and social reality of the Irish welfare state at the centenary point of the Irish revolution (1913–23). It argued that unlike many other modern democratic societies, the term ‘welfare state’ has had a weak political resonance in the lexicon of Irish social policy discourse. This reflects the weakness of the modernist project in Ireland and the absence of a classical European left-right political divide that gave shape to modern democratic politics. A more socially just republic will involve a universal welfare state charged with tackling the challenges of insecure job markets, scarce housing, and overstretched public services as a democratic imperative. A universal welfare state will also involve ten core social policy initiatives, including a universal health and social care system funded from taxation, ending child poverty, and addressing social inequality.

This chapter details the mess of the current planning system and suggests how planning can win back a degree of legitimacy. Planning has become a battleground. The system almost ensures that participants take unreasonable positions. Conservationists and local people take up opposition almost in principle because they have no confidence in what will emerge from the process. On the other side, developers use their legal and financial power to intimidate weak local authorities who are desperate to meet housing targets to get what they want. If the public is losing belief in planning, the solution is not to depoliticise it by making it more responsive to market signals or putting ‘experts’ in charge. Part of the solution is to engage more people and get their buy-in. Neighbourhood planning is a good way of doing this. However, the planning system must also show that it can deliver.

Stock price forecasting is a classic problem facing analysts. Forecasting models have been developed for predicting individual stocks and stock indices around the world and in numerous industries. According to a literature review, these models have yet to be applied to the restaurant industry. Strategies for forecasting typically include fundamental and technical variables. In this research, fundamental and technical inputs were combined into an artificial neural network (ANN) stock prediction model for the restaurant industry. Models were designed to forecast 1 week, 4 weeks, and 13 weeks into the future. The model performed better than the benchmark methods, which included, an analyst prediction, multiple linear regression, trading, and Buy and Hold trading strategies. The prediction accuracy of the ANN methodology presented reached accuracy performance measures as high as 60%. The model also shown resiliency over the housing crisis in 2008.

Abstract Most proportional directional control valves currently in practical use are piston spool valves. A disadvantage of this type of design is the occurring leakage between spool and sleeve or housing. A second disadvantage is that the service life is limited by wear on the control edges. The ceramic flat slide valve is a promising concept, which allows to reduce the mentioned leakage and to increase service life. In contrast to piston spool valves, the main stage of the flat slide valve consists of three plates. Two control plates and a movable slide plate, which is located in between. An external force is applied to the plates by the so-called pressure compensation, which presses the plates together and thus counteracts a gap expansion and thereby an effective reduction of occurring leakage is accomplished. The plate-by-plate design of the main stage allows the use of technical ceramics, which are more resistance to abrasive wear and can thereby extend the service life of valves. A challenge in the realization of the flat slide valve is the design of the pressure compensation. If the force applied by the pressure compensation is not sufficient to prevent a gap formation between the plates, an increased leakage will occur, which results in a reduction of efficiency. In case the applied force is too high due to the pressure compensation, high frictional forces between the plates occur and an adjustment of the slide plate position through an actuator is no longer possible. Therefore, the design of the pressure compensation is essential for the success of the concept. This contribution presents the results of testing a main stage, which consists out of two metallic control plates and a slide plate made of special brass. The main stage is designed in such a way that a 4/3-way directional control valve with a proportional characteristic can be realized, as it is also achieved by valves currently available on the market. Therefore, in addition to the pressure forces, further influences on the resulting force of the pressure compensation were determined and their influence was estimated based on test bench results. With a program written in MATLAB, the forces prevailing in the valve can be calculated time-efficiently for different geometries and are validated with test bench trials.

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%.