Nocturnal satellite-imagery is set to provide a range of new tools for financial analysis and an increasingly accurate picture of economic activity, according to the latest research from the IMF.

A study looking at a previously untapped source of satellite data has derived oil and non-oil GDP growth for Yemen by comparing night time satellite imagery on a sample of 72 countries for real GDP and 28 countries for oil GDP over 6 years.

“Satellite images are increasingly used to assess economic outcomes. With the generation and dissemination of important quantities of data gathered from remote sensing instruments2, it is now possible to approach human activity in places where conventional data suffer strong limitations,” Majdi Debbich, author of the IMF working paper explains.

The usefulness of satellite images of Earth at night — often referred to as "night lights" - to assess economic outcomes has been extensively documented in the recent literature. In a seminal paper, Henderson et al. (2012) use a global sample of countries to uncover a positive and significant relationship between the change in nightlights intensity and real GDP growth. The authors combine nightlights-based predicted real GDP with national accounts data to compute an enhanced measure of true real GDP growth

New analysis insights

This new tool is likely to provide insight for the analysis of economies, countries or regions with weak national statistics capabilities owing to structural issues or ongoing conflicts.

Most importantly, the high-level of disaggregation of satellite data and the capacity of sensors to capture various sources of energy allows for the characterization by location and type of activity detected

Based on the recent analysis, the IMF research estimates that real GDP contracted by a cumulative 24 percent over 2015-17 against 50 percent according to official figures for Yemen.

“The impact of the conflict has been geographically uneven with economic activity contracting more in some governorates than in others,” Debbich notes.

Read this working paper in full: http://www.imf.org/external/pubs/cat/longres.aspx?sk=48690

IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management. For a full list of IMF Publications visit: https://www.imf.org/en/Publications