BSP eyes new index to gauge consumer, business sentiment

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is launching a new index to help gauge the sentiment of consumers and businesses based on the prevailing economic conditions.

BSP Governor Benjamin Diokno said the central bank is developing a News Sentiment Index that will be based on online economic and financial news.

“The index aims to gauge consumer and business sentiment against the prevailing economic environment. However, the models are still in the early stages of development and have to go through more testing and enhancements to ensure their robustness,” Diokno said.

Diokno said the central bank partnered with the University of the Philippines and developed the BSP Big Data roadmap in 2019 given the clear advantages of using Big Data for economic assessment and policy formulation.

As part of the roadmap implementation, the central bank is modernizing its information technology (IT) infrastructure and enhancing the skills of its human resources to support the implementation and continued use of Big Data in its operations.

The BSP is also working on entering into data-sharing agreements with other government agencies to increase its Big Data sources.

“The use of Big Data technology is expected to further enhance the capacity of the BSP in the areas of economic research and analyses, formulation of monetary and financial stability policies, statistical compilation as well as financial regulation and supervision,” Diokno said.

Big Data is characterized by high volume, velocity, or variety of data that cannot be processed using conventional tools and software, and requires specific technology and analytical algorithms for its transformation into value for mission-critical processes.

As early as June 2020, the BSP enhanced its monitoring and surveillance of economic and financial developments, including the impact of COVID on the economy, by using high-frequency mobility indicators to analyze behavioral changes under different lockdown scenarios.

“At a time when official surveys and traditional data collection methods were hampered by strict quarantine restrictions, these indicators proved to be very useful as they provided up-to-date and critical information on the prevailing environment,” he said.

By leveraging non-traditional data, the BSP was able to assess the applicability and responsiveness of the existing policies to developments in the economy.

For instance, after observing a notable increase in the use of online transactions amid the pandemic, the BSP implemented reforms to the country’s foreign exchange regulatory framework to facilitate e-commerce or digital transactions of BSP’s stakeholders.