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Thailand is turning to satellite images for faster updates on the economy than official data can provide -- and the signs suggest a nascent recovery is underway.
Reviewing images from outer space of nitrogen dioxide concentration and visible light at night has become a regular routine at the Finance Ministry’s fiscal policy planning agency. Pisit Puapan, director of the agency’s macroeconomic unit, sees early indications of a rebound from April’s slump.
In a world rocked by the coronavirus pandemic, many countries are turning to alternative indicators like Google mobility trends, power consumption and website traffic to better assess how consumers and businesses are coping with lockdowns and the gradual reopening of their economies. Thailand is one of the worst-hit economies in Asia -- with the central bank expecting a contraction of more than 8% this year -- and officials are hunting for timely data as they shape policy.
“The economy today changes rapidly,” Pisit said. “Current monthly or quarterly indicators aren’t responsive enough, so we’ve been trying to find several high-frequency indicators to better monitor economic activities.”
“What we found from these indicators is that things started picking up since May,” he said. “The second quarter should be the lowest point of the economy, and we should see gradual improvement in the second half of this year.”
Google Earth
The Finance Ministry began using satellite data earlier this year -- just before the pandemic shuttered the economy -- as part of a push to use high-frequency indicators in policy making. Since then it has been able to track changes to economic activity through the lockdown and several stages of reopening.
The ministry is using data from Google Earth Engine to analyze nitrogen dioxide concentrations to track economic activity in Bangkok and the heavily industrialized eastern coast. Nitrogen dioxide is a by-product of burning fossil fuels, so more cars on the road, and rising use of power plants and industrial facilities, would lead to higher concentrations of the compound in the air.
Information from the Thai space agency is being tapped to track changes in geographic data and nighttime illumination. When Thailand imposed a nationwide lockdown in March, night lights in all regions across Thailand were 50% less bright, according to Norabajra Asava-vallobh, who headed the project to develop new high-frequency, informal indicators.
In the second quarter, the data showed that construction of new roads had slowed from the first quarter, while building areas expanded at a slower rate, said Norabajra, who also directs the economic and investor relations division at the Finance Ministry’s Fiscal Policy Office.
The satellite images don’t just give a snapshot of near real-time data; they also provide a forward-looking picture of the economy. For example, images that show agricultural production areas of Thailand’s key crops -- such as rice, corn, cassava and sugarcane -- allow the ministry to forecast output pre-harvest, and anticipate farm incomes. It can also show the effect of drought and floods on these crops.
“Our job is to plan fiscal policies with the goal of maintaining economic stability,” Norabajra said. “Knowing the real economic situation allows us to come up with timely and appropriate countercyclical fiscal policy.”
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