Description

This note decomposes Economic Policy Uncertainty (EPU) indices for 28 countries into domestic and global components, using state-space estimates to evaluate the recent influence of the global factor, particularly that originating from the US. The findings show that, in most countries, the global component has contributed more to overall EPU levels since late 2024 than during the 2007-08 Global Financial Crisis or the Covid-19 pandemic. Additionally, global synchronisation has reached record levels, as indicated by mean phase coherence, while multivariate wavelet coherence confirms alignment across both high- and low-frequency cycles. These results suggest a subdued global outlook, as a reversal of trade-restrictive policies is unlikely to restore prior economic conditions.