Space: The $1.8 trillion opportunity for global economic growth

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Space: The $1.8 trillion opportunity for global economic growth

By Alizée Acket-Goemaere et al., | McKinsey & Company | April 8, 2024

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The space industry is approaching the next frontier, with each week bringing news of a major development somewhere in the world. Be it a test of a new rocket system, the launch of an innovative satellite, or a robotic exploration mission safely landing on the moon, activity in space is accelerating.

A new report by the World Economic Forum and McKinseyhelp answer three critical questions:  How big will space’s “backbone” and its broader “reach” be across the world, by 2035?  How will the essential factors determine the trajectory of the future space economy? How can space change the world beyond revenue growth?

McKinsey estimates that the global space economy will be worth $1.8 trillion by 2035 (accounting for inflation), up from $630 billion in 2023. This figure includes both “backbone” applications—such as those for satellites, launchers, and services like broadcast television or GPS—and what the authors term “reach” applications”—those for which space technology helps companies across industries generate revenues. Uber, for example, relies on the combination of satellite signals and chips inside smartphones to connect drivers and riders and provide directions in every city.

In 2023, backbone applications made up $330 billion, or slightly greater than 50 percent, of the global space economy, while reach applications represented $300 billion. The expected annual growth rate for backbone and reach applications is twice the projected rate of GDP growth over the next decade.  For comparison, the value estimates for space are similar to those for semiconductors (estimated at $600 billion in 2021 with 6 to 8 percent annual growth into the 2030s) and roughly half of the projection for the global payments industry (estimated to reach $3.2 trillion in revenues by 2027).

The growth drivers for the space economy include the need for greater connectivity via satellites, higher demand for positioning and navigation services on mobile phones, and increased demand for insights powered by AI and machine learning. These innovations are delivering greater benefits to a more diverse set of stakeholders than ever before, including companies in industries ranging from food and beverage to transportation. They may also help solve some of the world’s greatest challenges, such as climate change.

3 key takeaways from the report

1. The space industry is approaching the next frontier, with each week bringing news of a major development somewhere in the world.  A new report by the World Economic Forum and McKinseyhelp answer three critical questions:  How big will space’s “backbone” and its broader “reach” be across the world, by 2035?  How will the essential factors determine the trajectory of the future space economy? How can space change the world beyond revenue growth?
2. McKinsey estimates that the global space economy will be worth $1.8 trillion by 2035 (accounting for inflation), up from $630 billion in 2023. This figure includes both “backbone” applications and what the authors term “reach” applications”.
3. These innovations are delivering greater benefits to a more diverse set of stakeholders than ever before, including companies in industries ranging from food and beverage to transportation. They may also help solve some of the world’s greatest challenges, such as climate change.

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Topics:  Space, Technology, GDP