Trade uncertainty could hurt economic development worldwide

Jul 5, 2019

Euro currency bills are pictured at the Croatian National Bank in Zagreb, Croatia, May 21, 2019. Picture taken May 21, 2019. REUTERS/Antonio Bronic - RC11C277EAD0

Until a stable trading policy is restored worldwide, uncertainty is heavily impacting the global economy. Image: REUTERS/Antonio Bronic

Nicholas Bloom

Professor of Economics , Stanford University

Davide Furceri

Economist, IMF’s Research Department

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The font in blue indicates the tariff measure taken, and the font in black indicates the narrative of the World Trade Uncertainty index. The WTU index is computed by counting the frequency of uncertain (or the variant) that are near the following words: protectionism, North American Free Trade Agreement (NAFTA), tariff, trade, United Nations Conference on Trade and Development (UNCTAD) and World Trade Organization (WTO) in EIU country reports. The WUI is then normalised by total number of words and rescaled by multiplying by 100,000. A higher number means higher trade uncertainty and vice versa. Image: Bown and Kolb (2019)

The WTU index is computed by counting the frequency of uncertain (or the variant) that are near the following words: protectionism, North American Free Trade Agreement (NAFTA), tariff, trade, United Nations Conference on Trade and Development (UNCTAD) and World Trade Organization (WTO) in EIU country reports. The WTU index is then normalised by total number of words and rescaled by multiplying by 100,000. A higher number means higher trade uncertainty and vice versa.

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The WUI is computed by counting the frequency of uncertain (or the variant) in Economist Intelligence Unit country reports. The WUI is then normalised by total number of words and rescaled by multiplying by 1,000. The WUI is then normalised by total number of words, rescaled by multiplying by 1,000, and using the average of 1996Q1 to 2010Q4 such that 1996Q1-2010Q4 = 100. A higher number means higher uncertainty and vice versa.

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