What can the sky tell us about economic recovery? The case of the West Bank & Gaza

Economic crises are usually measured through national accounts, employment surveys, business records, household data, and other traditional indicators. But what happens when conflict increases uncertainty while making conventional data harder to collect, precisely when quantitative evidence is most needed? Satellite observations can help fill part of that information gap. A growing body of research has shown that indicators visible from space, particularly nighttime lights and nitrogen dioxide (NO2), can complement conventional measures of economic activity. Nighttime lights provide information on changes in radiance and electrified activity, while NO2 offers a different signal linked more closely to fuel combustion, transport, power generation, and industry. Neither can replace official statistics, but together they can provide a more timely and geographically detailed view of economic change, including disruptions that unfold unevenly across locations or remain obscured within aggregate figures.[1] One potentially useful nontraditional indicator is nitrogen dioxide, or NO2. This short-lived air pollutant is produced largely through fuel combustion, including from vehicles, power generation, and industrial activity. Because these sources are closely connected to mobility, electricity use, and production, changes in NO2 can provide an independent signal of combustion-intensive economic activity. Research has shown that satellite observations of NO2 can help as a validation signal for economic activity, especially in the short term, particularly where conflict or other data limitations affect conventional statistics[2],[3] The results for the West Bank and Gaza are revealing, although they must be interpreted carefully. Using weekly observations of NO2 from the European Union’s Copernicus Satellite Sentinel-5P[4], we separated the underlying trend from seasonal patterns and short-term fluctuations. We then compared the average fitted trend during the 52 weeks before and after October 2023. Compared with the preceding year, NO2 levels in the year following October 2023 were nearly 10 percent lower in Gaza and around 2 percent lower in the West Bank. In the West Bank, this decline is consistent with the sharp tightening of movement restrictions and reduced access to the Israeli labor market after October 2023, both of which constrained mobility and economic activity. The decline in NO2 did not reverse following the October 2025 ceasefire. Instead, the satellite record suggests that the disruption to economic activity, as approximated through NO2 levels, persisted well beyond the initial shock and continued even as headline macroeconomic indicators in Gaza began to show modest improvement in early 2026. In fact, Gaza’s 3.1 percent year-on-year real GDP growth in Q1 2026 came from an exceptionally depressed base and indicated continued economic paralysis rather than meaningful recovery. These findings do not tell us how much production or GDP was lost, but can help reveal the scale, breadth, and persistence of disruption. More specifically in this case, they indicate that the NO2 levels associated with movement and fuel-burning activity remained unusually weak across much of the Palestinian territory during the conflict and after the ceasefire. Satellite observations therefore add texture to the picture provided by conventional economic data. They suggest that the disruption was not only deep, but also geographically widespread and persistent. Nighttime lights provide a useful second lens through which to interpret these results. In Gaza, monthly radiance dropped immediately after the conflict began and did not return to pre-conflict levels, including after the ceasefire. In the West Bank, by contrast, nighttime lights remained broadly stable even as NO2 declined. The divergence between these two satellite indicators may offer interesting clues about the changing features of economic activity. Nighttime lights are typically sensitive to electricity availability and illumination after dark. NO2 instead captures a different, though partly overlapping, range of activity associated with daytime road traffic, generators, machinery, power generation, and some forms of industrial production. In the West Bank, stable nighttime radiance alongside lower NO2 could therefore be consistent with reduced daytime mobility and other fuel-combustion activity while electricity use remains broadly sustained. This interpretation is not conclusive, yet it points to an economy that may remain illuminated at night while moving, producing, and circulating less during the day. This pattern is consistent with the intensified movement restrictions and limited access to the Israeli labor market after October 2023, and with the broader economic deterioration described in our forthcoming Fall 2026 Economic Update. These findings are informative, but the methodology has important limitations. NO2 is not generated exclusively by economic activity, and the relationship between emissions and output can vary across sectors and locations. Weather conditions, cloud cover, atmospheric chemistry, fires, and changes in the composition of energy use can all affect observed concentrations. Satellite indicators should therefore be treated as corroborating evidence, not as an alternative set of national accounts. Their value lies in data triangulation: official statistics quantify changes in measured output, while satellite observations can reveal their geographic reach, identify which physical activities may have weakened, and help assess whether improvements in headline figures correspond to a broader restoration of economic life. In contexts where conventional data are limited or slow to capture rapidly changing conditions, these tools could become a more systematic part of economic monitoring, helping policymakers identify disruptions, target responses more effectively, and distinguish early signs of recovery from statistical rebounds. _________________________________________________________________________________ [1] The literature is large, but for instance, see Henderson, J. V., Storeygard, A., and Weil, D. N. (2012), “Measuring Economic Growth from Outer Space,” American Economic Review, 102(2), 994–1028, on Nighttime Lights. Or also Ezran, I., Morris, S. D., Rama, M., and Riera-Crichton, D. (2023), “Measuring Global Economic Activity Using Air Pollution,” World Bank Policy Research Working Paper No. 10445, on the use of satellite observations of NO2 to improve the measurement of economic activity, combined with nighttime lights. [2] Ezran, I., Morris, S. D., Rama, M., & Riera-Crichton, D. (2023). Measuring global economic activity using air pollution (Policy Research Working Paper No. 10445). World Bank. [3] Guo, Z., Abushama, H., Siddig, K., Kirui, O. K., Abay, K., & You, L. (2024). Monitoring indicators of economic activities in Sudan amidst ongoing conflict using satellite data. Defence and Peace Economics, 35(8), 992-1008. [4] Copernicus Sentinel-5P is a European Union satellite that monitors the atmosphere worldwide, providing frequent measurements of air pollutants such as nitrogen dioxide; https://www.copernicus.eu/en