Space Economy to Reach $1.3 Trillion by 2040, UBS Projects

The global space economy's total addressable market is projected to reach $1.3 trillion by 2040, representing an annualized growth rate of approximately 7%, according to a new analyst report from UBS. The forecast is underpinned by expectations of falling launch costs, the expansion of satellite-based services, and a significant increase in national security spending.

The UBS Forecast

UBS analysts noted that their projection has been conservatively adjusted to account for potential project delays and technical hurdles. A more optimistic scenario, where technological development proceeds without major setbacks, could see the market approach $2 trillion.

For context, the Satellite Industry Association valued the narrower global space economy at $429 billion in 2025, a 3% increase from the prior year. Commercial satellite activities accounted for the majority of this value at $303 billion, or 71% of the total.

Drivers of Expansion

The report identifies several key catalysts for the sector's anticipated growth.

Declining Launch Costs

A primary driver is the dramatic reduction in the cost to place payloads into low Earth orbit. UBS anticipates this cost could fall below $250 per kilogram by 2040, a steep decline from the current range of roughly $1,500 to $2,000 per kilogram. This cost efficiency is expected to improve the commercial viability of satellite communications, Earth observation, and space logistics.

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Satellite Services and Defense Spending

Most of the new market value is expected to come from recurring space-enabled services rather than the launch activities themselves. In 2025, ground equipment was the largest single segment at $165.2 billion, followed by satellite services at $105 billion.

A surge in government spending is also a major factor. The proposed US Space Force budget for fiscal 2027 is $49.6 billion, a 30% increase. Other nations are also boosting investment, with Germany committing €35 billion to space assets by 2030 and NATO members planning to raise defense expenditures through 2035.

Investor Outlook and Headwinds

Despite inherent risks, investor interest remains strong. Venture investment in space technology reached $11.6 billion across 430 deals in the year-to-date through early July 2026, matching the total for all of 2025. Longer-term opportunities, such as private orbital stations and lunar infrastructure, continue to attract capital, though many remain technically unproven.

However, the report cautions investors about significant risks, including:

• Launch failures and project delays
• Inconsistent cash flow generation
• Increasing orbital congestion
• Evolving regulatory uncertainty