Global Uncertainty Increased at the End of 2022

The ongoing, though not yet fully resolved, COVID-19 pandemic, coupled with the Russia-Ukraine war and its resulting economic shocks in many countries, led to increased global uncertainty in the final quarter of 2022.

This is reflected in the World Uncertainty Index (WUI), a measure of global uncertainty compiled by a research team from the International Monetary Fund (IMF) and Stanford University.

The WUI research team compiles this index by calculating the percentage of occurrences of the word "uncertainty" in Economist Intelligence Unit (EIU) reports on economic conditions in 143 countries.

This percentage is then rescaled to WUI points by multiplying it by 1,000,000. A higher WUI score indicates a higher level of assumed global uncertainty.

Over the past five years, the global uncertainty index peaked in the first quarter of 2020, coinciding with the emergence of the COVID-19 pandemic.

Following this, the WUI index temporarily decreased until the first quarter of 2021, but its trend rose again until the fourth quarter of 2022, as shown in the graph.

"This (2022) was a turbulent year. The initially positive global economic growth outlook suddenly turned worrisome after the Russian invasion of Ukraine. Rapid and persistent inflation, particularly rising food and energy prices, weighed on economic growth," said IMF communications team member Andrew Stanley on the official website on Tuesday, December 27, 2022.

President Jokowi also stated that this uncertainty is felt by all G20 member countries, including Indonesia.

"From the recent G20 meeting, having met with all the G20 heads of state, I can conclude that everyone is bewildered. The global situation is indeed uncertain, complex, complicated, difficult to calculate, and difficult to predict," said Jokowi at the Bank Indonesia Annual Meeting (PTBI) at JCC Senayan, Jakarta, as reported by CNN Indonesia on Wednesday, November 30, 2022.

"For example, take just oil prices. Who can determine them? I asked the large oil producers, and even they can't predict them. I agree that we should be optimistic about 2023, but we must remain cautious and vigilant," Jokowi advised.