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Philippines: BSP eyes news sentiment index
MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is set to launch a news sentiment index (NSI) next year to capture relevant views on key macroeconomic events that may affect the current and emerging economic and financial environment.
Outgoing BSP Governor and incoming Finance Secretary Benjamin Diokno said the regulator intends to use a computer program to automatically gather information on topics of interest.
Diokno said the NSI would leverage on big data, machine learning, and artificial intelligence to enhance the BSP’s monitoring activities for policy development and macro-financial surveillance.
“For instance, to generate consumer and business sentiment, we will collect data from online sources, such as news websites. The information gathered will be processed using algorithms designed to extrapolate sentiment: in simpler terms, to determine whether news is positive, neutral or negative,” Diokno said.
Using advanced methods in data collection and processing, the NSI project involves the development of software that will automatically gather information on topics of interest, such as consumer and business sentiment, from online news sources.
The information gathered will, in turn, be processed using algorithms to derive the general sentiment on the economic and financial front.
“This novel way of gathering and processing information will result in a more efficient method of generating sentiment data on a real-time basis,” Diokno said.
According to the incoming secretary of the Department of Finance (DOF), the NSI would equip the central bank with a cost-effective and efficient data gathering solution useful for monitoring real-time economic developments, and which can serve as an important input for enhancing evidence-based policy formulation.
“This novel way of gathering and processing data will result in a more efficient method of generating sentiment data on a real-time basis,” Diokno added.
Based on studies of other central banks and researchers, the results of the NSI’s of other countries closely reflect those of the respondent-based sentiment surveys, such as the Business and Consumer Expectations Surveys released every quarter.
Studies also revealed that NSIs being used by the Federal Reserve Bank of San Francisco, Bank of Korea, Reserve Bank of Australia and other similar index used by Banca d’Italia, and Bank Negara Malaysia are strong predictors of leading economic indicators, such as inflation, interest rates, and gross domestic product (GDP).
BSP senior director Redentor Paolo Alegre Jr. said the regulator is looking at launching the NSI sometime in 2023 as the central bank is now procuring the necessary systems.
Source: https://www.philstar.com/business/2022/06/10/2187309/bsp-eyes-news-sentiment-index