Global Economic Uncertainty, Surging Amid War, May Slow Growth

IMF Blog, April 15, 2022

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The World Uncertainty Index is a quarterly measure covering 143 countries.
The authors: Hites Ahir, Nicholas Bloom, Davide Furceri. Date: April 15, 2022.
The recent surge in uncertainty associated with the war in Ukraine could reduce full-year global growth by up to 0.35 percentage point based on the authors' estimates.
Global uncertainty reached unprecedented levels at the initial coronavirus outbreak, then fell sharply, but rebounded in the first quarter of 2022.
Despite the recent jump, the current reading is still half the level at the onset of the pandemic.

A new monthly measure focuses specifically on the war in Ukraine and tracks uncertainty in 42 countries that represent about 90 percent of the global economy.
The monthly index is constructed by searching the Economist Intelligence Unit country reports for references to “uncertain,” “uncertainty,” and “uncertainties” appearing near words related to the war in Ukraine.
War-related search terms used include: Russia, Ukraine, sanctions, embargo, war, invasion, conflict, defense spending, military, geopolitical, Putin, Zelenskyy, oil, commodity, energy, gas.
The index is normalized by the total number of words in the report.

The monthly index shows war-related uncertainty has steadily increased since the beginning of 2022.
War-related uncertainty now accounts for almost 40 percent of the global total (right panel of the chart referenced).
Initially, uncertainty was higher in European countries compared with those elsewhere, but the gap across regions has narrowed over time, indicating broadening economic spillovers from the war.
The Chart of the Week presents the quarterly index since 1990 and the new monthly war-focused measure.

IMF Blog: Global Economic Uncertainty, Surging Amid War, May Slow Growth (April 15, 2022).