The State of the Space Economy at the End of 2023

The state of the space economy in 2023 is marked by significant growth and dynamic changes across commercial, government, and investment sectors.

Overall Growth: The global space economy grew by 8% in 2023, reaching $546 billion. The commercial space sector's growth was nearly 8%, amounting to $427.6 billion. This growth is remarkable considering it represents a $260 billion (91%) increase over the past decade​​.

Commercial Sector: The commercial space sector, which makes up 78% of the total space economy, saw its vitality driven by revenue from space ventures, including a significant rise in satellite broadband services. The communications sector, in particular, grew by more than 17%, from $24 billion in 2021 to $28 billion. The satellite manufacturing for the commercial sector also saw a boom, with a 35% increase in satellites sent to orbit from 2021 to 2022​​.

Government Sector: Government space spending globally has increased, with a notable rise in defense spending, which now accounts for 45% of government space budgets. The U.S. alone accounted for nearly 60% of global government space spending, which totaled $69.5 billion. This increase in military space spending is partly attributed to global tensions, such as the Russian invasion of Ukraine and rivalries with China​​.

Moon and Mars Missions: The year 2023 saw a renewed focus on lunar missions, with multiple uncrewed landings planned. Both private companies and national agencies are actively participating in these missions. Additionally, the developments in commercial human spaceflight, including the first-ever commercial spacewalk and the potential first orbital flight of SpaceX's Starship rocket, indicate significant strides in private space exploration​​.

Investment Trends and Dynamics: There was a global downturn in space investing initially, but a recovery seems to be underway with increased global investment and larger growth stage deals, especially in the U.S. and Europe. The U.S. saw a significant rebound with total investment in Q2 of 2023 almost doubling from the previous quarter. Notably, the space investment landscape has become more diverse, with significant deals coming from various countries beyond the usual players like the U.S. and China​​.

Mergers and Acquisitions (M&A): The space industry has seen an uptick in M&A activity, driven by competition with SpaceX, private equity interest, and consolidation. Large deals, such as Viasat's acquisition of Inmarsat and Eutelsat’s merger with OneWeb, reflect the need for space companies to combine forces to survive the competitive landscape​​.

Operational Challenges: The challenging fundraising environment has forced startups to cut costs and delay further fundraising. This situation has led to layoffs and delayed payments to suppliers, affecting the entire industry's supply chain​​.

The space economy in 2023 is characterized by robust growth in commercial revenues, increased government spending, particularly in defense, a focus on lunar and Mars missions, a recovery in global space investment, significant M&A activities, and operational challenges impacting startups and the wider supply chain.