BSP improves macroeconomic surveillance

Published January 29, 2021, 6:00 AM

by Lee C. Chipongian

Under new economy

 To improve the monitoring of COVID-19 impact on the macroeconomy, the Bangko Sentral ng Pilipinas (BSP) is tracking other useful information such as mobility data and texts analytics from newspaper articles to supplement and complement traditional statistics to measure economic activities as the Philippines slowly emerges from a lockdown that has lasted a year, and still counting.

BSP Governor Benjamin E. Diokno announced Thursday that BSP is now adopting mobility indicators as part of its surveillance toolkits to track the pace of the gradual reopening of the economy at near-real time. This will aid monetary policymaking to push output growth back to pre-pandemic levels, he said, as it enables multilevel analysis of major cities, not just Metro Manila.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno (MB file)

During Diokno’s regular “GBED Talks” with the press, he said the pandemic brought with it data challenges for the BSP which is heavily reliant on standard economic and financial market data. He said the data on mobility indicators provide a more granular and real-time look at consumer and business activity, and complement the usual macroeconomic indicators such as manufacturing indices and the GDP. It also includes mobility tracker reports from smartphone apps.

Diokno also disclosed its future use of texts analytics or text mining, and will rely on news posted online. This is now being studied by the BSP.

“(The) Department of Economic Research is undertaking a study on measuring COVID-19 induced uncertainty in financial markets using texts analytics. The study is meant to monitor any uncertainties in financial markets (due to the pandemic) using data from newspaper articles,” he said.

DER senior director Zeno R. Abenoja said to access more timely and reliable data, the BSP will continue to use IT and academic literature as well, for an informed policymaking. “The mobility indices and other similar indicators will be helpful, including sentiment indicators that could be gathered from scraping news and information from the Internet.  This is part of the growing toolkit of policymakers and we will continue to take advantage of these tools, and develop them, and help inform policymaking moving forward,” said Abenoja.

He said the BSP is also tracking, through text mining, policy uncertainty indices, on top of indices to gauge sentiment.

“As of now, most of these are being applied to newspaper articles that are posted on the web but presumably the technique can also be used to scrape information and formulate indices from social media accounts,” Abenoja added.

He said this will be part of the BSP research agenda. “It’s a work in progress and we hope this will provide useful information to supplement and complement existing macroeconomic indicators as well as other efforts to further improve the traditional statistics that we generate for the Philippine economy.”

The BSP reported Thursday that there has been a gradual pickup in mobility as quarantine restrictions were lifted beginning in June last year. In December, for example, the mobility index for groceries and pharmacies rose to a peak of 40 percent on Christmas Eve. The BSP noted that this was above pre-quarantine baseline levels – “although this could also be partly linked to holiday spending,” it said. 

As of January 17, the BSP said mobility in workplaces were still below pre-pandemic levels at -16 percent compared to baseline, as office employees are still on work-from-home (WFH) arrangements. Also noted were the low transit mobility at -49 percent compared to baseline because of limited public transportation.

Mobility will only improve when access to transportation is normalized, and public confidence will also return with the mass COVID-19 vaccinations.

“We have started to open up (and) I think we have to live with the virus. We just have to observe the health protocols but we cannot forever stay home. That is not good (and it will not) help the economy,” said Diokno.

The BSP will use mobility indicators for its sectoral nowcasts for GDP growth which Diokno said has evolved after the most severe period of the virus containment measures (March to May 2020) have been lifted.

The mobility data – gathered from Apple mobility trends and Google community mobility report – are high-frequency indicators that could be integrated into the BSP’s macroeconomic surveillance to compare economic activity before and during the pandemic.