BSP to Launch a News Sentiment Index in the Philippines
The Bangko Sentral ng Pilipinas (BSP) is eyeing to start a news sentiment index (NSI) next year to capture important views on key macroeconomic events that alter the current and emerging economic and financial environment.
Outgoing BSP Governor and incoming Finance Secretary Benjamin Diokno stated that regulators aim to use a computer program to automatically collect information on topics of interest.
Diokno noted that NSI would take advantage of big data, machine learning, and artificial intelligence to intensify BSP’s monitoring activities for policy development and macro-financial surveillance.
Diokno expressed, “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.”
The NSI project necessitates the development of software that will automatically gather information on topics of interest, such as consumer and business sentiment, from online news sources by using advanced techniques in collecting data and processing.
The gathered information will be processed using algorithms to acquire the general view on the economic and financial front.
Diokno cited, “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 explained that the NSI would equip the BSP with a cost-effective and efficient data gathering solution useful for monitoring real-time economic developments, which can serve as a vital input for developing evidence-based policy formulation.
Diokno added, “This novel way of gathering and processing data will result in a more efficient method of generating sentiment data on a real-time basis.”
According to the study of researchers and BSP, the result of the NSI’s of other countries closely reflect those of the respondent-based sentiment surveys, like the release of the Business and Consumer Expectations Surveys quarterly.
Studies also show that NSI’s are being utilized 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. noted that the regulator is looking at starting the NSI sometime in 2023 as the central bank is now obtaining the necessary systems.