Bank of Korea Develops New News Sentiment Index: “Refined Selection of Highly Relevant Economic Articles”

"Capturing Positive and Negative Sentiment Related to Actual Economic Activity"
Distinguishing Present and Future Article Content to Derive Economic Sentiment by Time Period

The Bank of Korea has developed a new News Sentiment Index (NSI) to address the limitations of the previous version. The News Sentiment Index is an indicator that gauges the sentiment of economic agents by analyzing positive and negative emotions in economic news articles. Since February 2022, the Bank has been publishing this as an experimental statistic.

Bank of Korea building. Bank of Korea.

On the 1st, the Bank said, “With the rapid progress in natural language processing technologies, language models can now understand the overall context of entire articles, not just keywords or certain sentences. By leveraging these technological advancements, we have developed a new News Sentiment Index that more precisely captures the economic sentiment reflected in news coverage, and we will start publishing it this month.”

Choi Byoungjae, Head of the Statistics Research Team in the Economic Statistics Department 1 at the Bank of Korea, explained, “Unlike the previous NSI, which utilized all collected articles, the new NSI system excludes advertisements and promotional articles, and only selects articles that are highly relevant to domestic economic activity for sentiment analysis.” He added that this selection process was aimed at more precisely identifying psychological factors actually related to economic activity. The content of news articles was also categorized by time frame—present or future—to derive economic sentiment for each period.

The Bank has fine-tuned a Korean language–specific pretrained language model to develop one suitable for determining domestic economic relevance, classifying time periods, and performing sentiment analysis. The number of sentence samples used in sentiment analysis was increased from 10,000 to 20,000.

The new NSI demonstrated the highest correlation when leading the Consumer Sentiment Index by one month and the Business Sentiment Index by two months. The correlation coefficients at these time lags were higher than those of the previous NSI. Choi noted, “We believe that the association with official sentiment indicators has been strengthened. Especially for the expectations News Sentiment Index, which contains information on future economic conditions, its correlation with the official sentiment indicators is even stronger than that of the new NSI, which spans both present and future periods.”

According to analysis of the shock responses in consumption and investment following changes in economic sentiment, improvements in news sentiment led to increases in both consumption and investment. Choi pointed out, “When news sentiment improved, consumption in semi-durable goods such as clothing, footwear, and bags increased within one month but the effect faded quickly; in contrast, the increase in investment lasted for 7 to 8 months.” He added that the new NSI is highly timely, offering high utility in situations where real indicators like industrial production cannot be observed due to publication delays.

Choi continued, “The new NSI, calculated using an advanced language model, shows improved predictiveness for official sentiment indicators and provides better informational power regarding actual economic activities compared to the previous index. Because the new NSI is timely and contains information useful for judging business conditions as well as economic sentiment, we expect it will be highly valuable for real-time business cycle monitoring and economic analysis.”

Meanwhile, the new News Sentiment Index rose to 106.47 in August, improving from 101.83 in July. Choi explained, “This was affected by the continued strong performance in exports and the stabilization of the previously volatile financial market. While the stock market is not as strong as before, it has stabilized upwards to some extent. With the exchange rate also stabilizing downward, we assess that, overall, the index increased compared to July.”

This content was produced with the assistance of AI translation services.