Government Space Budgets Surge Despite Global Pandemic

Government space budgets grew 10 percent in 2020 compared to 2019, demonstrating the highest yearly budget growth since 2009, according to Euroconsult’s Government Space Programs 2020 report, published in December 2020. Global government space budgets totaled $82.5 billion in 2020, and COVID-19 had no visible effect in 2020 as the pandemic occurred with budgets already in place. The 2000s were marked by rapid space budget growth before a flattening in 2010 as public finances came under pressure, due to the global financial crisis as well as defense budgets downcycling. Growth has resumed since 2015, and 2020 represented a historic high for government space budgets. But their sustainability post-COVID remains to be seen.

In 2020, civil budgets totaled $50.2 billion, 61 percent of total spending, up from their 51 percent share in 2007. Spending was boosted by three factors: more emerging players investing (though signs of this number peaking are becoming apparent, and a drop-off of emerging countries investing in space may become more pronounced post-COVID); more ambitious civil programs by mature powers, particularly exploration and crewed spaceflight; and the lure of increasing the commercial market share for a country’s industry.

Defense space programs are cyclical and dominated by United States spending, totaling $32.4 billion in 2020, an unprecedented 14 percent increase from 2019. The three main defense budget drivers include the current global upcycle phase; the strong emphasis on space security in all leading space nations, with a marked interest in Space Situational Awareness (SSA) by leading and emerging space countries; and a generalized trend of the militarization of space. The space militarization trend is seen in recent Anti-Satellite (ASAT) tests by India and Russia, as well as a number of space-focused defense organizations being established over the past five years, including the Russian Space Forces (2015), China’s PLA Strategic Support Force (2015), the U.S. Space Force (2019), India’s Defence Space Agency (2019), and Japan’s Space Operation Squadron (2020).

A number of competing forces make forecasts challenging. The highest-risk factor for world government space budgets remains the economic consequences of COVID, since its economic fallout is likely to put pressure on government budgets. Emerging space countries, which in recent years have also increasingly contributed to global space budgets, may cancel or postpone their space budgets to shore up their finances. However, a decrease is not guaranteed, because mature powers have committed themselves to ambitious, multi-annual programs on both the civil (space science and exploration and human spaceflight) and defense sides. These long-term commitments make budget drawdowns trickier to navigate, and therefore should sustain investments. Regarding the current defense procurement cycle, spending is forecasted to peak in the mid-2020s before downcycling in the latter half of the decade. It is possible that COVID-induced budgetary pressures may make the current defense upcycle shorter and shallower, precipitating the downcycle phase.

In terms of global ranking, the United States remains the undisputed leader in government space spending, accounting for 58 percent of the world total ($47.7 billion in 2020). China consolidates its second-place position at $8.9 billion, posting the fastest growth amongst the top five countries with a 9.4 percent five year CAGR. France surges ahead to third place ($4 billion), driven by increasing European Space Agency (ESA) contributions and defense spending, as well as boasting the highest European national spending. Russia slides to fourth place as its public finance situation forced the country to slash its space budgets between 2013 and 2020. Japan has remained steady over the decade, with 2020’s $3.3 billion nearly matching 2012’s peak of $3.6 billion, with budgetary levels likely to be sustained at approximately this level in the coming decade due to constraints that allow little room for significant growth.

Regarding government investments in space applications in 2020, human spaceflight is the highest-funded space application by governments worldwide at $13.2 billion, overtaking the $11.7 billion invested in Earth Observation (EO) and meteorology, which have been the most popular applications since 2012. Space science and exploration came in third, with a total value of $9 billion in 2020.

Regarding government investments in space applications in 2020, human spaceflight is the highest-funded space application by governments worldwide at $13.2 billion, overtaking the $11.7 billion invested in Earth Observation (EO) and meteorology, which have been the most popular applications since 2012. Space science and exploration came in third, with a total value of $9 billion in 2020.

Human spaceflight investment has traditionally been concentrated in only the most advanced spacefaring countries, with the top five investors including the United States ($9.5 billion), China ($2.2 billion), ESA ($605 million), Russia ($333 million) and Japan ($326 million), accounting for more than 95 percent of total spending. However, new entrants are beginning to emerge, including India which has invested $255 million, and has human spaceflight mission Gaganyaan scheduled for 2021. Other countries are funding astronaut programs via agreements with NASA and Roscosmos to train and fly an astronaut to the International Space Station (ISS), largely to increase the visibility of their fledgling space programs and increase national prestige.

Related to this are government investments in space science and exploration spurred on by strong rivalry between space powers resulting in a five year CAGR of 9.4 percent. Ambitious exploration programs by the United States, China, Japan, and Europe drive growth (with three major Mars missions launching in 2020), but as with crewed spaceflight, some emerging powers such as the United Arab Emirates (UAE) have also launched exploration missions.

On the defense side, space militarization is an increasing trend as a result of growing geopolitical tensions. While historical military space powers drive initiatives and investments (led by the United States, Japan, Russia, China, and France) new players are increasing investments such as the European Union (EU), India, and emerging space nations (UAE, Australia, and others). Space security and early warning programs have experienced a 24 percent five year CAGR to total $3.7 billion in 2020, and projected to continue to grow strongly over the next decade. New space military branches are being stood up, new capabilities such as SSA are maturing, and space is increasingly being seen as a warfighting domain by militaries around the world and increasingly included in defense policies.

Looking forward, over the next decade, world space budgets are forecasted to continue their growth trend, despite likely short-term budgetary turbulence caused by the coronavirus pandemic and its economic fallout. By the end of next decade, total government space budgets worldwide are forecasted to reach nearly $100 billion. Civil budgets are expected to falter somewhat in the coming three or four years, though growth is expected to rebound and grow steadily over the decade, driven by new entrants and leading powers investing in long term science, exploration and manned flight programs. On the defense side, budgets will be fueled by increased spending in leading space powers, with India, Japan, China, and the United States all placing additional emphasis on space security as they invest in next-generation systems, including a marked interested SSA programs. As a result, world defense spending will peak by mid-decade at an estimated $40 billion, before beginning to downcycle afterwards, mostly due to U.S. program cycles. VS

Simon Seminari is a Principal Advisor at Euroconsult. He is the chief editor of the “Government Space Programs: Benchmarks, Profiles & Forecasts to 2029” report, published in December 2020.

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