The relationship of uncertainty and economic growth in the context of the COVID-19 Pandemic: A P-SVAR analysis on BRICS-T

Uncertainty is a concept that can be defined in different ways across different domains. Generally, uncertainty refers to the inability to predict or clearly understand the outcome of a situation or event. In economic terms, uncertainty is a factor that disrupts the flawless mechanism of rational thinking or breaks the cause-effect relationships. Therefore, uncertainty poses a challenging factor in the decision-making process for economic decision units, policymakers, and scientists. Consequently, measuring and analyzing uncertainty are considered significant factors in the decision-making process. This study aims to comprehend the relationship between uncertainty and economic growth and provide concrete recommendations to policymakers. Furthermore, its significance lies in being one of the few studies analyzing the impact of uncertainty on economic growth in the BRICS-T countries. The calculation of the Economic Policy Uncertainty Index in South Africa and Turkey, which are not included in the Economic Policy Uncertainty Index, demonstrates the originality of this study. In this regard, the study employsStructural Panel VAR analysis to examine the effects of uncertainty indexes (World Uncertainty Index, World Pandemic Uncertainty Index, World Trade Uncertainty Index, Economic Policy Uncertainty Index, and Geopolitical Risk Index) on economic growth in the BRICS-T countries using quarterly data from 1996 to 2021. As a result of the study, it is observed that uncertainty indexes(World Uncertainty Index, World Pandemic UncertaintyIndex, World Trade Uncertainty Index, Economic PolicyUncertainty Index, and Geopolitical Risk Index) have a negative impact on economic growth in the BRICS-T countries. Therefore, policymakers need to pursue more predictable and stable policies. Furthermore, strengthening crisis management strategies, ensuring stability in trade policies, and promoting dialogue and cooperation in international relations are necessary. Thus, by reducing the level of uncertainty, long-term sustainable growth goals can be achieved.