ECONOMIC INDEXES IN INTELLIGENCE ANALYSIS – A STUDY ON SOVEREIGN RISK INDICATORS

Abstract

In this paper, we evaluate the use of sovereign risk indicators in analytical procedures according to Brazilian Intelligence Doctrine. Sovereign risk indicators are among the best-known benchmarks in economic and financial evaluations used by market firms. These indexes are able to summarize significant swathes of data available in open sources. They are also useful to determine levels of structural economic fragility of countries relevant to Brazilian decision-makers and the likelihood of financial crises that may occur in these nations. In terms of intelligence analytics, we strive to understand how efficient sovereign risk indicators are in merging economic data available in open sources, as well as how useful they can be to Economic Intelligence analytical tasks. We conclude that the combined usage of both indicators is recommended. On the one hand, strictly quantitative indicators, such as EMBI+, are more precise, but less complete than sovereign ratings. On the other hand, sovereign ratings combine quantitative and qualitative aspects in its engenderment, on the other hand, and allow for broader inferences towards the economic facts under investigation, at the cost of loss of exactitude.