Global uncertainty is the new normal. Here’s why institutional legitimacy and resilience is crucial

Uncertainty is the defining condition of our era, as seen in the unprecedented levels of the IMF’s World Uncertainty Index and the disconnection between major economic indicators and real-world outcomes.
Societies weather uncertainty better when they have strong, inclusive institutions that stabilize expectations, distribute shocks fairly, and enable adaptation.
Confusing uncertainty with risk can lead to wrong responses, especially in financial markets where optimistic predictions are favored over preparation for disruption.
Resilience, as evidenced by Denmark’s energy strategy and Spain’s labor market reforms during the Covid-19 pandemic, relies more on long-term institutional capacity and political will than on brute financial firepower.
Institutional legitimacy is crucial for effective governance under uncertainty; undermining this legitimacy can harm economic stability and growth.
The importance of inclusive institutions has never been greater, as they act as a form of collective insurance against a future fraught with unpredictable shocks.

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