Opinion | From the US-China trade war to Trump’s impeachment inquiry and Brexit, record levels of political uncertainty are battering the global economy

Geopolitical tensions and rising protectionism are pushing global uncertainty indices to, or near to, record highs, leaving world economic growth and trade teetering on a knife edge

Reading Time:3 minutes

IMF managing director Kristalina Georgieva talks to World Bank president David Malpass at the World Bank/IMF Annual Meetings in Washington on October 19. Both institutions have warned of slowing global growth. Photo: AP

Published: 9:30am, 30 Oct 2019Updated: 9:40am, 30 Oct 2019

Uncertainty is the No 1 enemy of investment markets. That is why indices devised by social scientists to measure and quantify uncertainty in the marketplace are highly sought after by investors and decision-makers.

As uncertainty clouds the global economy, several such indices are at or near record highs. These include the World Uncertainty Index, World Trade Uncertainty index, and their sub-indices on global economic policy uncertainty and global trade policy uncertainty.

Researchers and index compilers cited the trade war between the United States and China, Brexit, and US President Donald Trump’s impeachment inquiry in the House of Representatives as the most important reasons behind soaring uncertainty indices.

The World Uncertainty Index previously spiked after the September 11 terror attacks, the severe acute respiratory syndrome (Sars) outbreak, the second Gulf war and the euro debt crisis. The World Trade Uncertainty index, meanwhile, has since jumped 10-fold from previously recorded highs.

In an apparent reflection of the US-China trade row, the global trade policy uncertainty index started to rise in the third quarter of last year, coinciding with the start of the punitive tariff war.

The index declined in the fourth quarter as Washington and Beijing reached a truce to halt the escalation of tariffs at the G20 meeting in December, in Buenos Aires. It spiked again this year following another round of US tariff hikes announced for March 1.

Select Voice

Choose your listening speed

Get through articles 2x faster

1.25x

250 WPM

Slow

Average

Fast

00:0000:00

1.25x

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;} Geopolitical tensions and rising protectionism are pushing global uncertainty indices to, or near to, record highs, leaving world economic growth and trade teetering on a knife edge

Geopolitical tensions and rising protectionism are pushing global uncertainty indices to, or near to, record highs, leaving world economic growth and trade teetering on a knife edge