Miguel Angel Ariño. PHOTO: loaned

The IESE Economic Uncertainty Index (I3E) stood at 100 points last December, down 21 points from the previous month. This decline was due to both a decrease in uncertainty about Spain's debt and a drop to unprecedented levels in uncertainty about oil prices. The new index, prepared by IESE University of Navarra professor Miguel Ángel Ariño, which summarizes the uncertainty surrounding the economic situation, was presented this morning in Madrid.

The Spanish 10-year bond index fell from 190 to 168, and the index for the price of brent fell from 36 to 13, the lowest level of uncertainty in a decade. The other two indices, the IBEX and the dollar price index, also declined, but not as significantly. At summary we are at a level of uncertainty equal to the average of the last 10 years.

Even so, the last two or three years have seen a huge increase in uncertainty about the status economy. Financial markets have shown significant fluctuations and there is a generalized feeling among companies and citizens of great uncertainty about the status economy. The magnitude of the crisis we are experiencing only increases the impact of this uncertainty on the lives of companies and families.

Since the beginning of the banking crisis, which reached its peak with the bankruptcy of Lehman Brothers, financial markets have shown fluctuations never seen before. Moreover, there is no longer any question about the fall in global production or the recession in some Western economies that had previously maintained a good rate of growth.

In this context, the sense of uncertainty is more than justified. However, until now there was no specific indicator that provided an objective data to measure or compare it in different periods and economic contexts. The new IESE Economic Uncertainty Index, developed by IESE's International Center for Decision Making (ICDM), will do so on a monthly basis.

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