When the onset of the pandemic drastically changed economic conditions across the globe, policymakers with access to real-time economic data were much better placed to make quick, informed policy decisions.

A new world of big data is now unfolding, where satellites orbiting in space are helping to inform economic decisions—both for industry and policymakers.

New IMF staff research shows that some of the large data gaps routinely faced by small fragile states could be filled using satellite data. Specifically, trade volumes can be measured and tracked in real time, which is a critical input for policy decisions.

For example, as shown in our latest chart of the week, this method of tracking trade could have highlighted trade and supply-chain disruptions to the Pacific region well before the World Health Organization (WHO) declared a global pandemic in March 2020.

In the case of Pacific island countries, the research shows that although these nations managed to insulate themselves from COVID-19 infections by closing their borders, they were not insulated from the economic repercussions of the pandemic, especially in early 2020.

All countries experienced sharp import contractions in the early stages of the pandemic, due to supply disruptions related to port restrictions that affected the regional trade network, including lockdowns in China.

Later, imports were further depressed by a lockdown-induced demand shock. Imports subsequently recovered in countries with low dependence on tourism but remained depressed in tourism-oriented economies.

While different strands of research continue to examine how satellite data can better inform trade (and other) patterns, our new estimation method helps fill gaps in official data and provides early warnings of turning points in economic activity.

The algorithm overcomes the challenges of previous studies in estimating cargo payloads; uses detailed information on shipping liner schedules to validate port calls; and applies country-specific information to define port boundaries. Using satellite-based vessel tracking data from the UN Global Platform, it constructs daily indicators of port and trade activity for the Pacific island countries.

Timely information on trade disruptions is of particular importance for Pacific island countries given their vulnerability to external shocks, including climate-related natural disasters. The approach discussed here could be extended to measuring the impact of such shocks, providing critical information to close data gaps and potentially help build resilience to climate change.

These and other related issues will be discussed in November at the IMF Statistical Forum on Measuring the Economic and Financial Dimensions of Climate Change.

Serkan Arslanalp is Deputy Division Chief in the Balance of Payments Division of the IMF’s Statistics Department. He has worked in several departments of the Fund (APD, MCM, FAD, AFR) on a range of countries (advanced economies, emerging markets, low-income/fragile states) and policy areas (strategy; bilateral, regional, and global surveillance; Fund lending operations; standards; capacity development). He has led missions to several countries in the Asia-Pacific and Middle East regions. With Takahiro Tsuda, he has pioneered a widely used database on the global investor base for sovereign debt. His research has been published in leading journals, including the IMF Economic Review, Japan and the World Economy, Journal of Economic Perspectives, and the Journal of Finance. Mr. Arslanalp holds an undergraduate degree in Economics and Computer Science from MIT and a PhD in Economics from Stanford University.

Robin Koepke is an economist in the IMF’s Asia & Pacific Department, where he serves as desk economist on Indonesia and Fiji. He previously worked in the IMF’s Monetary & Capital Markets Department, focusing on market surveillance and financial stability issues. Before joining the IMF in 2016, he spent six years at the Institute of International Finance (IIF), the global association of financial institutions, where he served as an expert on global capital flows and the U.S. economy.

Jasper Verschuur's doctoral research, which is funded by the EPSRC, focuses on the vulnerability and resilience of global port infrastructure and dependent supply-chains to natural disasters. His research seeks to understand how economies and global supply-chains are dependent on ports and will result in the development of a methodological framework to quantify the potential macro-economic losses of port disruptions due to the extreme weather events or natural disasters. In his work, he combines a range of methodological approaches including geospatial analysis, remote sensing (detecting port assets using satellite imagery), big data and machine learning (using real-time vessel tracking data), and disaster and macro-economic impact modelling. His work aims to evaluate how ports, governments and businesses can adapt to the increasing risk of supply-chain disruptions in order to help strengthen the business case for making investments in improving supply-chain resilience. The outcomes of this research have been adopted by organisations such as the UN Statistical Division and the World Bank.

This article first appeared at the IMFBlog, a forum for the views of the International Monetary Fund (IMF) staff and officials on pressing economic and policy issues of the day. The views expressed are those of the author(s) and do not necessarily represent the views of the IMF and its Executive Board. Reprinted with permission