BOK Unveils AI-Based 'Sentiment Index' Analyzing Economic News... Predicts Economic Trends Two Months Ahead

The Bank of Korea has developed a new News Sentiment Index (NSI) that uses artificial intelligence (AI) to analyze the sentiment within economic news. This index has been confirmed to move ahead of actual official sentiment indicators. Designed for real-time business cycle monitoring, the new News Sentiment Index reflects the sentiment of economic actors mentioned in articles, enabling the assessment of the economic climate without waiting for statistical aggregation and release schedules.

A key feature of the new indicator is its use of the latest language models. Language models, an AI technology that learns human language, understand document meaning at a contextual level. While previous approaches were limited to detecting sentiment in specific words or sentences, the new NSI reflects the entire context of an article to identify the direction of sentiment. It can even detect positive or negative nuances of the same expression depending on the context.

A new filter was also introduced to screen analysis targets. The new indicator is designed to selectively analyze only articles with high relevance to domestic economic activity.

According to the Bank of Korea, the new News Sentiment Index showed the highest correlation when leading the Consumer Sentiment Index by one month and the Economic Sentiment Index by two months. The central bank explained that its leading capability regarding official sentiment indicators has been strengthened compared to existing methods. Sentiment serves as the starting point that leads to consumption and investment.

The Bank of Korea will release the new News Sentiment Index every Monday at 4 PM through the Economic Statistics System. This allows anyone to examine the flow of economic sentiment updated on a weekly basis.