Economic uncertainty is increasingly shaping global financial conditions, influencing decisions across trade, investment, and policy.
“Uncertainty has evolved into a key driver of economic behavior,” noted an expert during a World Economic Forum session.
But how do economists quantify such an abstract concept?
In today’s environment, characterized by geopolitical tensions and shifting economic alliances, uncertainty has become a central theme in global economic discourse.
“The most significant factor we’re observing right now is uncertainty,” said Marion Laboure, Managing Director and Macro Strategist at Deutsche Bank, speaking at a World Economic Forum event in Dubai. Unlike concrete metrics such as inflation or GDP growth, uncertainty lacks direct measurement, requiring indirect approaches.
One common method involves sentiment analysis and surveys. The World Economic Forum’s Chief Economists’ Outlook regularly polls top economists to assess perceived uncertainty levels. In its May 2025 report, 82% of respondents rated current uncertainty as very high, with expectations of negative consequences for trade, GDP expansion, and foreign direct investment.
That survey coincided with a period of intense volatility, as former U.S. President Donald Trump announced sweeping tariff increases. The September 2025 edition of the Outlook concluded that the global economy had entered a “new era of heightened uncertainty.”
Other institutions use similar tools. The U.S. Federal Reserve’s Beige Book compiles anecdotal evidence from its 12 districts, recently highlighting “historically high uncertainty” affecting consumer spending and business investment. The European Commission and the Bank of England also conduct regular surveys to gauge economic sentiment.
“Uncertainty now acts as an independent economic force,” said Nela Richardson, Chief Economist at ADP, during a Forum event in New York.
Beyond surveys, economists have developed indices to track uncertainty. The Economic Policy Uncertainty Index analyzes media mentions of terms related to economic instability, regulation, taxation, and public debt. For the U.S. version, it also considers tax code expirations and discrepancies among economic forecasts. This index spiked in April 2025, aligning with the Forum’s survey findings.
Past peaks in the index corresponded with major global disruptions, including the 9/11 attacks, the 2008 financial crisis, and the onset of the COVID-19 pandemic. Researchers behind the index argue that prolonged policy uncertainty in the U.S. and Europe has likely undermined macroeconomic performance.
Another tool, the World Uncertainty Index, created by International Monetary Fund economists, analyzes over 140 country reports from the Economist Intelligence Unit to identify global uncertainty trends.
Despite differing methodologies, experts agree on the damaging effects of unpredictability.
“The core challenge for businesses is unpredictability,” said Thani Ahmed Al Zeyoudi, UAE Minister of Foreign Trade. “Long-term planning becomes nearly impossible.”
Sarah Thorn, Vice-President of Global Government Affairs at Walmart, emphasized that a rules-based international system fosters stability and opportunity, especially for smaller enterprises.
— news from The World Economic Forum
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Uncertainty is impacting the global economy. How is it measured?
Uncertainty is having major impacts on the global economy. n n”Uncertainty has become its own economic actor,” one expert said at a World Economic Forum event. n nBut how exactly is a concept like uncertainty measured in economic data and analyses? n nUncertainty has become a defining characteristic of the global economy as geo-economic shifts and geopolitical tensions upend long-held economic assumptions. n n“The biggest driver that we ‘re looking at now is uncertainty,” Marion Laboure, Managing Director and Macro Strategist at Deutsche Bank, said this month at a World Economic Forum gathering of top interdisciplinary experts in Dubai, United Arab Emirates. n nBut unlike more tangible economic indicators like inflation rates and gross domestic product (GDP) growth, uncertainty is inherently abstract. So how is uncertainty measured in economic data and analyses? n n‘Era of heightened uncertainty’ n nEconomists often measure uncertainty indirectly though proxy data such as surveys and sentiment analyses. n nThe World Economic Forum’s Chief Economists’ Outlook, for instance, routinely surveys chief economists from across sectors to gauge the perceived level of uncertainty in the global economy. In the May 2025 edition of the report, 82% of chief economists said the current level of uncertainty was very high. That, the economists noted, would likely have adverse impacts on trade volumes, GDP growth and levels of foreign direct investment. n nThe survey for that edition of the Outlook coincided with “a time of extraordinary volatility and uncertainty,” as US President Donald Trump announced that the United States would impose sweeping and significant tariff hikes. n nThe subsequent edition of the Chief Economists’ Outlook in September 2025 followed with an observation that the global economy had entered a “new era of heightened uncertainty.” n nMany other institutions conduct survey research to gauge the level of uncertainty in the global economy. n nThe US Federal Reserve, for example, routinely publishes a report known as the Beige Book. The report compiles anecdotal information from the central bank ‘s 12 districts on various economic conditions, such as uncertainty. Last month, the Beige Book report found that “historically high uncertainty” threatened to weaken consumer spending and continued to impact business investment decision-making. n nOther examples of surveys that gauge uncertainty include the European Commission’s business and consumer surveys and the Bank of England’s Decision Maker Panel. n n“Uncertainty has become its own economic actor and it ‘s influencing all kinds of decisions,” Nela Richardson, the Chief Economist of ADP, said at another World Economic Forum event last month in New York, United States. n nUncertainty shocks n nEconomists have also developed various indices to measure uncertainty. n nThe Economic Policy Uncertainty Index, for instance, was developed by economists who quantified news-media mentions across countries of keywords related to economic uncertainty, regulation, taxes and government debt. For the United States-specific index, the expiration of tax code provisions and disagreement among economic forecasters are also factored in. n nThe uncertainty index soared in April 2025, corresponding to the Forum’s Chief Economists ‘ Outlook survey results. n nOther historic periods of high economic uncertainty include the September 11th terrorist attacks in the United States, the 2008 global financial crisis and the outbreak of the COVID-19 pandemic, to name a few. n n“Our findings are broadly consistent with theories that highlight negative economic effects of uncertainty shocks,” the economists who developed the index noted in a research paper. “The results suggest that elevated policy uncertainty in the United States and Europe in recent years may have harmed macroeconomic performance.” n nAnother example of a global uncertainty index is the World Uncertainty Index. The index, developed by International Monetary Fund economists, is based on an analysis of uncertainty trends documented in over 140 country reports from the Economist Intelligence Unit, the research division of the Economist Group. n nUnpredictability and business n nApproaches for measuring uncertainty may differ, but experts agree on its negative impacts on the global economy. n n“The main issue for the businesses is the unpredictability,” UAE Minister of Foreign Trade Thani Ahmed Al Zeyoudi said at the Forum’s event in Dubai. “No one can stick to a business plan, no one can have a long term plan.” n nSarah Thorn, Vice-President of Global Government Affairs and International Sourcing at Walmart, added at the event that “A rules-based system creates certainty for businesses, creates opportunity for small businesses.”