Reducing economic uncertainty

Increasing economic certainty
Reducing business uncertainty

Description

Reducing economic uncertainty involves implementing policies and mechanisms that stabilize markets, ensure predictable regulatory environments, and enhance transparency in economic decision-making. This strategy aims to minimize risks for businesses and individuals by providing reliable information, fostering resilient financial systems, and promoting consistent government actions. By addressing volatility, unclear regulations, and information gaps, it supports investment, long-term planning, and sustainable growth, thereby remedying disruptions caused by unpredictable economic conditions.

Context

The level of business uncertainty in developing countries is often much higher than in developed economies. Uncertainty encourages companies to build up inventories and cash balances, while discouraging innovation and investment. While a certain amount of uncertainty is unavoidable, governments can reduce it by providing information on their own intentions and the economy in general, by making regulations less arbitrary, and by providing guarantees and insurance. Consultation between business and government can be encouraged by creating a forum for public and private participants to meet and air their views.