The space economy is poised for significant growth over the next decade, expanding from $630 billion in 2023 to a projected $1.8 trillion by 2035 according to a recent report by the World Economic Forum in partnership with McKinsey & Company. This growth, representing a 9% annual increase that outpaces global GDP, will be driven by both the space industry itself as well as the increasing integration of space technologies into other sectors. The report highlights the key developments expected to shape the trajectory of the space economy and its far-reaching impacts on industries and society as a whole.
The Space Backbone and Its Global Reach
The report segments the space economy into two main components – the “backbone” consisting of space hardware, infrastructure and services, and the “reach” encompassing the applications and economic activity enabled by space technologies across industries. In 2023, the backbone and reach each account for roughly half of the $630 billion space economy. However, by 2035 the reach is projected to grow 1.5 times faster at an 11% annual rate, making up nearly 60% of the $1.8 trillion total.
Within the backbone, state-sponsored civil and defense investments will remain a cornerstone, growing at a still substantial 7% annually. Commercial activity will also see robust growth, particularly in communications, positioning, navigation and timing (PNT), and Earth observation. Satellite communications will continue to be the largest commercial segment, expanding from $133 billion to $218 billion by 2035 as large constellations provide greater connectivity. PNT and Earth observation will grow even faster as adoption increases across industries.
On the reach side, space technologies will increasingly become integrated into and essential for the operations of companies across sectors. PNT-enabled applications like ride-hailing, last-mile delivery and fleet management will be among the biggest drivers. Satellite communications will connect more consumers and businesses to the digital economy. And Earth observation data will provide valuable insights for industries from agriculture and energy to finance and insurance.
Key Factors Shaping the Future Trajectory
The report identifies technological evolution and financial competitiveness as two key factors that will influence the growth of the space economy, with the potential to drive it to a higher or lower trajectory relative to the $1.8 trillion base case.
On the upside, improved access to and usability of space data combined with reduced costs across the value chain could propel the space economy to as high as $2.3 trillion by 2035. Widespread data accessibility through aggregation tools and standardization could facilitate greater adoption by non-space industries. Continued end-to-end cost curve improvements, enabled by developments like reusable rockets, could further lower barriers to entry and accelerate investment and innovation.
Conversely, stalled accessibility and rising competition from terrestrial alternatives pose downside risks that could limit growth to $1.4 trillion. Steady launch costs and stagnating data accessibility could hinder expansion of space activities. At the same time, advancing technologies on Earth, such as 5G communications, could reduce demand for certain space-based solutions if they prove more cost-effective.
Impacts Beyond Revenue Growth
The report emphasizes that the value of the space economy will extend far beyond the revenues generated for space companies themselves. Space technologies have the potential to help address some of society’s greatest challenges:
- More accurate and timely data from Earth observation satellites combined with advancing analytics capabilities will transform disaster forecasting and response, allowing officials to better predict, prepare for and mitigate the impacts of natural catastrophes.
- Satellite imagery and sensing will play an increasingly vital role in monitoring climate change, from tracking carbon emissions and deforestation to measuring ice melt and sea level rise. This data will be critical to informing policies and actions to combat global warming.
- Connectivity provided by satellites will help bridge the digital divide, bringing internet access to underserved populations and enabling participation in the digital economy, remote education and telemedicine.
- Precise PNT data will optimize global logistics and supply chains, improving the efficiency of transportation networks and trade flows.
- Geospatial intelligence from space will enhance global security, allowing better monitoring of borders, human trafficking, refugee migrations and military threats.
Realizing the full societal benefits of space capabilities will require collaboration between public and private sector players to develop accessible and affordable solutions. The report highlights the increasing investments and participation in space by countries across the globe, which could give more nations a voice in shaping the future of the space economy.
Implications and a Call to Action
The findings demonstrate that the space economy is at an inflection point, with the coming decade poised to see a rapid expansion in both the scale of space activities and the scope of their integration into industries and daily life on Earth. For space companies, this growth will bring opportunities to provide new technologies, infrastructure and services. For non-space industries, space represents a largely untapped frontier to enhance operations, generate valuable data and reach new markets.
To fully capture this value, the report calls on leaders across sectors to actively engage with the space economy. It recommends companies explore partnerships with space players to develop customized applications and invest in making space data more accessible and usable. It advises space firms to adopt a “space for non-space” mindset, working to understand and serve the needs of other industries.
For governments and policymakers, the report emphasizes the importance of enacting frameworks to ensure the space economy develops in a safe, sustainable and equitable manner. This includes establishing standards for data and hardware interfaces, incentivizing private investment and innovation, and proactively addressing risks like space debris and cybersecurity threats. International collaboration will be key, as the impacts of space transcend national borders.
Note that the WEF report does not reflect New Space Economy’s opinion of future space economy demand drivers and growth.
