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Economic index

BOK to offer news-based weekly economic index

Apr 01, 2021 (Gmt+09:00)

(courtesy of Bank of Korea)
(courtesy of Bank of Korea)

South Korea’s central bank will launch a new economic index based on analysis of online business news articles.

The Bank of Korea said on Apr. 1 that it will publish the News Sentiment Index (NSI) on its Economic Statistics System (ECOS), on a weekly basis starting from the second week of this month.

The NSI adopts machine learning technology to analyze specific sentences of news articles written by 50 media outlets, classifying each sentence as positive, negative or neutral, to track changes in consumer and business sentiment.   

If there are more positive sentences than negative ones within a given week, the index figure will be higher than 100. A figure less than 100 means that there were more negative sentences than positive ones.  

The Bank of Korea's News Sentiment Index equation
The Bank of Korea's News Sentiment Index equation

The central bank evaluated that NSI has shown a close correlation with its key monthly indices, the Composite Consumer Sentiment Index (CCSI) and the Business Survey Index (BSI), as well as with GDP figures.

With the NSI published weekly, experts and policymakers are likely to stay closer to market sentiment changes for timely analysis and action in between the bank’s monthly and quarterly reports, according to the bank’s statement.  

The NSI is the Bank of Korea’s first index that uses machine learning and big data analysis tools. Institutions that offer similar news-based economic indices include the Federal Reserve Bank of San Francisco, which tracks the Daily News Sentiment Index.

Write to Ik-Hwan Kim at lovepen@hankyung.com

Daniel Cho edited this article.

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