The space economy is poised for monumental growth, with projections indicating it will reach a staggering $1.8 trillion by 2035. This expansion is driven by advancements in satellite and rocket-enabled technologies, which are increasingly integrated into various sectors of the global economy.
A new report, “Space: The $1.8 Trillion Opportunity for Global Economic Growth,” outlines key developments and potential impacts of this burgeoning industry, underscoring the transformative potential of space technologies in addressing some of the world’s most pressing challenges.
Space Economy Overview
The space economy, encompassing everything from weather forecasting to smart gadgets, is rapidly evolving. According to the World Economic Forum (WEF) and McKinsey & Company’s report, the current value of the space economy stands at $630 billion. By 2035, this figure is expected to triple, averaging an annual growth rate of 9%, significantly outpacing global GDP growth. Key drivers of this expansion include communications, positioning, navigation, timing, and Earth observation services.
Broader Impact Beyond Traditional Boundaries
The influence of space technologies extends far beyond traditional aerospace sectors. As highlighted by Sebastian Buckup, Member of the Executive Committee at the WEF, space technologies are delivering unprecedented value to a diverse array of stakeholders. Industries such as retail, consumer goods, food and beverage, supply chains, and disaster mitigation are poised to benefit significantly from space-enabled innovations. These technologies have the potential to reshape entire industries, much like smartphones and cloud computing have done.
Key Developments in the Space Economy
1. Space as a Larger Component of the Global Economy
The space economy’s projected growth to $1.8 trillion by 2035 is fuelled by increasing applications of space-based technologies. These technologies are set to revolutionise sectors including supply chain management, food and beverage logistics, defence, retail, and digital communications. These five sectors alone are forecasted to generate 60% of the global space economy by 2035.
2. Beyond Space: Indirect Economic Impact
The share of the space economy captured by traditional hardware and service providers will gradually decrease. Instead, the benefits will spread to a variety of industries that rely on space-enabled technologies. For instance, ride-hailing apps and other services utilising satellite data will experience significant growth.
3. Connectivity and Logistics
Enhanced connectivity through satellite technology will transform the logistics and supply chain industries. Improved tracking and navigation systems will lead to more efficient transportation and delivery processes, benefiting sectors like food and beverage by ensuring better efficiency in last-mile delivery of perishable goods.
4. Societal and Environmental Benefits
The return on investment in space will transcend financial gains, offering substantial societal and environmental benefits. Space technologies will play a crucial role in disaster warning and management, climate monitoring, and humanitarian response. Innovations such as methane leak detection from industrial infrastructure will aid in mitigating climate change.
Expansion and Investment in the Space Economy
The number of satellite launches has increased by 50% annually, while launch costs have dropped tenfold over the past two decades. This reduction in costs, coupled with ongoing commercial innovation, has paved the way for unprecedented activities in space. Investments in the space sector reached all-time highs of over $70 billion in 2021 and 2022, driven by both state and non-state actors.
Space tourism, once a science fiction concept, is now a burgeoning market. By 2035, it is expected to generate revenues of $4-6 billion, primarily from in-orbit stays aboard space stations by ultra-high-net-worth individuals.
Michael Suffredini, CEO of Axiom Space, emphasizes the synergy between supportive space policies, pioneering business models, and a vibrant space economy as key enablers for the advancement of civilization. The future of space involves not only building destinations but also creating economic ecosystems.
Transformative Potential of Space Technologies
Space technologies are set to revolutionize various sectors, including agriculture, information technology, insurance, and construction. Earth observation (EO) satellites, once narrowly used tools, are now integral to countless day-to-day decisions across these industries. The integration of cloud computing, data, and AI has enhanced the utility of EO data, expanding its applications from agriculture to environmental, social, and governance (ESG) reporting.
Addressing Global Challenges
Space technologies hold the promise of addressing some of the world’s greatest challenges. For instance, satellite positioning data can optimize disaster response and improve resilience in communication networks. Space-based monitoring of climate variables will enhance our ability to manage and mitigate the impacts of climate change.
Additionally, space technology can bridge digital divides and widen access to education and healthcare, thereby addressing socioeconomic inequalities. Precise monitoring of agriculture and natural resources will contribute to more efficient resource management and environmental conservation.
Embracing the Future of Space
The report by the WEF and McKinsey & Company highlights the vast potential of space for public and private sector stakeholders. By embracing the full potential of space technologies, businesses across various industries can position themselves as leaders in the new and expanding space economy, unlocking long-term benefits for society.
The global space economy’s trajectory is promising, with projections suggesting it could reach $2.3 trillion under optimal conditions. Conversely, if access to space is restricted and Earth-based technological advancements stall, the space economy could still achieve a substantial $1.4 trillion valuation.
Regardless of the scenario, understanding and harnessing the potential of space technologies will be crucial for public and private players to unlock myriad applications for the benefit of all.
Sources and References
- World Economic Forum. (2023). Space: The $1.8 Trillion Opportunity for Global Economic Growth. Retrieved from World Economic Forum
- McKinsey & Company. (2023). The Future of Space Economy. Retrieved from McKinsey & Company
- Planet Labs. EO Satellites and Their Role in Modern Applications. Retrieved from Planet Labs
- Axiom Space. (2023). The Role of Space Policy in Economic Growth. Retrieved from Axiom Space
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