Russia mines big data to monitor its economy
Country joins other nations in using real-time indicators
MOSCOW: Raw numbers no longer cut it for Russia’s central bank in its effort to keep up with the economy.
Instead, the man running its research and forecasting wants to know how Russians really feel by mining “big data,” gathered from social media and online stores. The Bank of Russia has already developed a gauge of economic activity by scouring a news site, according to Alexander Morozov, who’s headed the department for almost two years after a decade as HSBC Holdings Plc’s economist in Moscow.
“I’d like to build a whole line of indexes using big data -- for economic activity, a forward indicator of the labour market, and also an index of price pressure,” Morozov said in an interview.
Russia’s central bank is the latest to turn to big-data analysis as policy makers from China and Indonesia to Norway and the UK sift through information to get a better grasp of their economies by using real-time indicators. Under the stewardship of Governor Elvira Nabiullina, the Bank of Russia has already become more data-driven, adding to its roster of publications by issuing reports on such indicators as trend inflation and using public surveys to understand consumer sentiment and people’s expectations of price growth.
In Russia, the quality of official statistics has been under scrutiny, with Morozov’s department questioning figures on retail sales earlier this year. The government in April shifted control over the Federal Statistics Service to the Economy Ministry, which had also criticized the accuracy of data.
Faced with an uneven recovery from Russia’s longest recession this century, making sense of the discrepancies in the economy hasn’t been easy. A top central banker recently expressed “shock” at June’s inflation read- ing after an unexpectedly large jump in consumer prices.
Morozov believes the central bank can rely on big data to pry information even more forward-looking than that contained in purchasing managers’ indexes, which are usually published around the first of each month. The country has 88 million internet users, the largest such audience in Europe and among the world’s 10 biggest, according to the Russian Association for Electronic Communications.
To glean clues about inflation, for example, the Bank of Russia can focus on a single word, such as “prices,” and study the context in which it appears and how that’s changed over time, according to Morozov.
The measure of economic activity the central bank has already developed – based on contextual analysis of a Russian news site that Morozov didn’t name –- outperforms PMIs, he said. It was already tested as far back as the beginning of 2016. The data set will be extended further into the past to see how it functions.
“If these forward-looking qualities also appear during an analysis of previous years, then we’ll use it,” Morozov said. — Bloomberg