Big Data Information and Nowcasting: Consumption and Investment from Bank Transactions in Turkey
This provides a real-time economic forecasting tool, particularly useful for emerging markets with longer statistical release lags, though it is incremental as it applies existing methods to new data.
The study used bank transaction data from Turkey to replicate quarterly consumption and investment aggregates in real time, successfully demonstrating their ability to nowcast Turkish GDP, with the big data information being most valuable early in the nowcasting process when traditional data is scarce.
We use the aggregate information from individual-to-firm and firm-to-firm in Garanti BBVA Bank transactions to mimic domestic private demand. Particularly, we replicate the quarterly national accounts aggregate consumption and investment (gross fixed capital formation) and its bigger components (Machinery and Equipment and Construction) in real time for the case of Turkey. In order to validate the usefulness of the information derived from these indicators we test the nowcasting ability of both indicators to nowcast the Turkish GDP using different nowcasting models. The results are successful and confirm the usefulness of Consumption and Investment Banking transactions for nowcasting purposes. The value of the Big data information is more relevant at the beginning of the nowcasting process, when the traditional hard data information is scarce. This makes this information specially relevant for those countries where statistical release lags are longer like the Emerging Markets.