Big data may help guide Japan economy through pandemic pain

As well as postponing the Tokyo 2020 Olympics, the coronavirus has hit Japan’s economy, but big data is helping to get a clearer picture of the path to recovery. (AFP)
Short Url
Updated 24 July 2020

Big data may help guide Japan economy through pandemic pain

TOKYO: Big data is providing some surprising results for the Bank of Japan and helping ease concerns about pressure on the economy during the coronavirus pandemic, which could influence the way the BoJ manages the world’s most radical monetary stimulus.

By tapping data provided by Google showing people’s movement via mobile phones, the BoJ found that households’ discretionary spending rebounded faster and more vividly in Japan than in other countries after lockdown steps were lifted in May.

Other big data also showed a marked rebound in durable goods sales such as personal computers, which offset some of the weakness in spending on services including leisure, eating-out and travel.

The revelation helped convince BoJ policymakers to conclude the economy has past the worst and did not need immediate, additional monetary support. “We expect the economy to recover gradually and steadily,” BoJ Governor Haruhiko Kuroda said after the bank’s decision this month to keep monetary policy steady.

“Service sectors, such as sports and other events, may not recover to pre-COVID-19 levels easily . . . But consumption and production of goods have hit bottom and are now rebounding sharply,” he said.

Long seen as one of the most conservative central banks when it comes to data, the BoJ is now marshalling a 180-member statistics team to troll through cargo freight movement, traffic data collected from smart phones and satellite images of human activity around factories, for better insights into the economy.

HIGHLIGHTS

Big data helped to boost BoJ’s conviction of economic recovery.

Team of economists troll through traffic data, satellite images.

Task force created to reflect big data in economic assessments.

Non-traditional data may also affect the way the BoJ gauges success in meeting its elusive 2 percent inflation target.

An index tracking real-time trends using private data showed prices of some goods rose steadily even as services costs slumped, suggesting price moves may not be as deflationary as the official consumer price index (CPI) suggests.

The findings prompted the BOJ to warn in its quarterly report in July of the need to look at both the inflationary and deflationary impact COVID-19 could have on prices.

While CPI will remain the BoJ’s key price gauge, its policy may become more detached from the index with more alternative information available, some analysts say.

“The BoJ knows its conventional approach of simply tracking CPI won’t work. While they won’t change the 2 percent target, they will start looking at a wider range of data,” said Tsutomu Watanabe, a former BoJ official and a pioneer of big data in Japan.

“Policymakers will have to fully rely on big data. That’s already happening across the world and will only accelerate.”

Major central banks are increasingly turning to real-time data to make quick calls on the pandemic-hit economy, as traditional indicators such as monthly retail sales and unemployment figures arrive too late to give a reliable picture of the impact of COVID-19.

The Federal Reserve has led the drive, tapping numerous high-frequency data and exploring new ways such as creating online polls and an index gauging changes in human movement.

The BoJ is playing catch-up.

Last year, the bank created a task force to better reflect big data findings into its economic projections — a small but significant departure from the 140-year-old institution’s traditional emphasis on theory and models.

It also introduced its version of a weekly index the New York Fed uses that combines frequently updated consumer and industrial activity data into a gauge of gross domestic product.

Kazushige Kamiyama, the BoJ’s top economist who spearheaded the changes, says the bank is ready to hire and develop data scientists who can streamline data collection and analysis. His mission is gaining steam because of the pandemic.

“In times of shock, uncertainty over the state of the economy and its outlook heightens. It’s like driving without your lights on,” Kamiyama said.

“That’s when non-traditional data that gives us quick information, including high-frequency data, become really valuable.”


Taps and reservoirs run dry as Moroccan drought hits farmers

Updated 22 October 2020

Taps and reservoirs run dry as Moroccan drought hits farmers

  • The problems caused by increasingly erratic rainfall and the depletion of groundwater are growing every year in Morocco

RABAT: Two years of drought have drained reservoirs in southern Morocco, threatening crops the region relies on and leading to nightly cuts in tap water for an area that is home to a million people.

In a country that relies on farming for two jobs in five and 14 percent of its gross domestic product (GDP), the problems caused by increasingly erratic rainfall and the depletion of groundwater are growing every year.

In the rich citrus plantations of El-Guerdan, stretching eastward from the southern city of Agadir, more than half of farmers rely on two dams in the mountains of Aoulouz, 126 km away, to irrigate their trees.

However, that water has been diverted to the tourist hub of Agadir, where mains water has been cut to residential areas every night since Oct. 3 to ensure taps in households did not run entirely dry.

“The priority should go to drinking water,” Agriculture Minister Aziz Akhannouch said in parliament last week.

In El-Guerdan, Youssef Jebha’s crop of clementine oranges has been compromised by reduced water supply, he said, which affects both the quality of fruit and the size of the harvest.

“The available ground water is barely enough to keep the trees alive,” said Jebha, who is head of a regional farmers’ association.

“Saving Agadir should not be at the expense of El-Guerdan farmers,” he added, speaking by phone.

‘We hope for rain’

El-Guerdan is not alone in facing drought. Morocco’s harvest of cereals this year was less than half that of 2019, meaning hundreds of millions of dollars of extra import costs.

Despite lower production, Moroccan exports of fresh produce have risen this year by 8 percent. 

Critics of the government’s agricultural policy say such sales are tantamount to exporting water itself, given the crops use up so many resources.

A report by Morocco’s social and environmental council, an official advisory body, warned that four-fifths of the country’s water resources could vanish over the next 25 years.

It also warned of the risks to social peace due to water scarcity. In 2017, 23 people were arrested after protests over water shortages in the southeastern city of Zagora.

In January the government said it would spend $12 billion on boosting water supply over the next seven years by building new dams and desalination plants.

One $480 million plant, with a daily capacity of 400,000 cubic meters, is expected to start pumping in March, with the water divided between residential areas and farms.

Until then, “We hope for rain,” the agriculture minister said in parliament.

In El-Guerdan, the farmers are digging for water. A new well costs $20,000-30,000. However, “there is no guarantee water can be found due to the depletion of ground reserves,” said Ahmed Bounaama, another farmer.