Uncertainty, risks and downside bias

Summary

It has become fairly commonplace to talk about the high uncertainty of the global economic scenario, about growth prospects that, whatever they may be, are generally being revised downward or at risk of default biased in that direction.

Key points

• Key points:
• Uncertainty is inherent in assessing the economic scenario, since it includes the definition of future prospects.
• Although there are various ways of approximating economic uncertainty and it is not a variable that can be directly observed, it could be said that it is higher now than in the past.
• Big data and natural language processing techniques mean that new indicators of uncertainty can be developed; these are added to the more traditional ones from financial market volatilities and spreads.

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