May 25, 2022
RavenPack presents a macroeconomic nowcasting model that leverages its EDGE data platform to predict real-time economic activity of four important emerging market economies: Brazil, Russia, India and South Africa.
In recent years, the term “nowcasting” has entered the economic and financial jargon to describe the real-time development of macroeconomic and financial conditions. These nowcasting models can leverage information from potentially noisy, higher-frequency data releases to estimate current values of infrequently published indicators.
In this whitepaper, we introduce a macroeconomic nowcasting model based on RavenPack
EDGE to predict real-time economic activity of four important emerging market economies: Brazil, Russia, India and South Africa (BRIS).
Our study finds that RavenPack news analytics help improve timeliness and accuracy of traditional macroeconomic nowcasting models. Specifically, we find that:
Out-of-sample forecasting error improves by 5% to 25% depending on the country and the prediction period.
Prediction accuracy is significantly enhanced during periods with a sparsity of core macroeconomic releases.
Aggregating news analytics over relatively short time horizons (30 and 90 days) provides an optimal assessment of the prevailing macroeconomic situation in a timely fashion.
Nowcasting models are powerful tools for mitigating uncertainty when formulating monetary policy or investment decisions.
RavenPack Edge tracks over 7,000 key business, geopolitical and macroeconomic events across 7.1 million companies, 4.5 million individuals, and 60,000 products and services. Using proprietary natural language processing technology powered by heuristic and machine learning engines, sentiment data is derived from over 40,000 sources including news, filings and transcripts in 13 languages.
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In this presentation, Paolo Andreini, Senior Data Scientist at RavenPack, introduced a macroeconomic nowcasting model,based on RavenPack EDGE, that can help predict real-time economic activity.
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