The past year has presented extraordinary challenges for the global economy, driven by supply chain issues, geopolitical tensions, and inflation worries. The IMF has quantified this uncertainty through the World Uncertainty Index (WUI), which analyzes reports across countries. Notably, 27 of the top 40 nations experiencing the highest uncertainty are developing economies, highlighting the greater challenges they face. The research underscores a correlation between economic uncertainty and factors such as political unrest and institutional volatility, further compounded by recent global events.
The World Uncertainty Index, developed by the IMF, uses novel text mining techniques to quantify uncertainty based on the frequency of related terms in country reports, providing insights into global economic instability.
Emerging markets face the highest levels of uncertainty as they navigate volatile institutions and political unrest, while advanced countries also experience significant spikes in uncertainty during tumultuous political events.
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