The space economy, often seen as the next frontier for economic growth, is estimated to be growing at an impressive rate. However, how accurate are these estimates? Estimating the space economy’s past size, and estimating its future size and growth comes with unique challenges. This article explores these challenges, the methods for calculating the space economy, the criticisms of these calculations, and the considerations needed when interpreting space economy market reports.
Challenges in Forecasting the Future
Market analysts face several challenges when making forecasts for any industry, and the space economy is no exception. These challenges include the unpredictability of technological advances, economic fluctuations, regulatory changes, market demand, geopolitical environment, and market competition. In the space economy, additional unique challenges include technical complexity, dependency on government policy, and the nascent stage of many space-related businesses/markets.
Space economy future forecasts, are for all intents and purposes, built upon a foundation of shifting sand.
Challenges in Estimating the Past
It might seem easy to determine the past size of the space economy. Unfortunately, what is included in the space economy, and what is not, varies from organization to organization. Moreover, the interrelationships of the organizations participating in the space economy are complex.
Several methods are used to estimate the past size of the space economy. These include gross value added, gross output, investment, employment, and imports/exports. Each method has its strengths and weaknesses, and the choice of method can significantly influence the resulting forecast.
For instance, in the gross output approach, sales are collected for each producer/industry in the space economy, such as satellite manufacturing, launch services, and satellite services. However, the method can be complicated by businesses that are not fully dedicated to the space economy. For example, a telecommunications company might generate a significant portion of its revenue from space-based assets but also have substantial non-space-related operations. Also, the output of one producer might become the input to another producer’s product or service, which can result in double counting. For example, satellite components or GPS chips.
Criticisms of Space Economy Estimates
Organizations’ estimates of past size the space economy have faced criticism. One of the main criticisms is the overestimation of the size of the space economy. For instance, some studies have been accused of double-counting between categories or including products and services not directly related to space. For example, some organizations have included high altitude balloons in their estimates.
Organizations Involved in Space Economy Estimates and Forecasts
Many organizations have published estimates on the size of the space economy, including Deloitte, Citi, Space Foundation, McKinsey, Morgan Stanley, U.S. Bureau of Economic Analysis (BEA), Canadian Space Agency, UK Space Agency, Euroconsult, NSR, Bryce Technology, Bank of America and others. These estimates vary considerably due to differences which include methodology, assumptions, data sources, and areas of focus.
Interpreting Space Economy Estimates and Forecasts
Not all space economy market reports are equal. They can differ based on various factors, including:
- Different methodologies and assumptions
- Different data sources
- Different timeframes, e.g. calendar versus fiscal year
- Different areas of focus
- Different geographical scopes
- Different markets included
- Different degrees of conservatism or optimism
- Different levels of detail
- Different regarding if adjustments have been made for inflation or not
- Different currencies and conversions
Understanding these differences is essential when interpreting market reports. Additionally, its important to consider the inherent uncertainty in all market reports, potential biases from the organizations publishing the reports, the context in which the estimates were made, and the dynamic nature of the space economy.
While the space economy presents immense opportunities, determining its past, current, and future size and growth is a complex task filled with uncertainties. By understanding the methods, challenges, and considerations involved in space economy estimating, stakeholders can make more informed decisions and better prepare for the future of the space economy.
