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Report: Aerospace and Defense Industry Stands to Profit from ‘Heightened Geopolitical Risk’

The global aerospace and defense industry stands to profit next year from a resurgence in global military spending in an era of rising geopolitical tensions, according to a new industry study by multinational professional services firm Deloitte.

“In the commercial aerospace sector, aircraft order backlog remains at an all-time high as demand for next-generation, fuel-efficient aircraft continues to surge with the rise in oil prices,” wrote Robin Lineberger, the leader of Deloitte’s Aerospace & Defense industry practice, in the report. “In the defense sector, heightened global tensions and geopolitical risks, recovery in the U.S. defense budget and higher defense spending by other major regional powers such as China, India and Japan are expected to drive global defense sector growth in 2019 and beyond.”

Aerospace and defense generated $86 billion in 2017, making it the top exporting industry in the U.S.

The 2019 Global Aerospace and Defense Industry Outlook found:

  • China’s 2018 defense budget grew to $17 billion, an 8 percent increase over the previous year, and the country could require 7,700 commercial aircraft worth $1.2 trillion in the next 20 years.  
  • France plans to boost its defense spending by 40 percent over the next six years as it aims to meet the NATO target of “2 percent of GDP” spent on defense by 2025. Military spending in France is projected to increase by 5 percent per year until 2022.
  • India is expected to become the third-largest aviation market in the world by 2025, and its defense budget increased 7.7 percent in FY2018 over the previous year.
  • Japan is projected to see sluggish air passenger growth over the next 20 years. The country’s domestic market is dominated by two major Japanese airlines, which have seen a decrease in market share over the past 10 years. The country’s most recent defense budget increased 2.1 percent to $47.6 billion.
  • Middle East passenger traffic is projected to grow by 5.2 percent over the next 20 years, creating a demand for nearly 3,000 new aircraft worth $660 billion. Seven out of the top 10 countries with the highest military expenditure as a percentage of GDP are in the Middle East: Oman, Saudi Arabia, Kuwait, Jordan, Israel, Lebanon and Bahrain.
  • The United Kingdom is projected to increase its defense budget from $52 billion to $78 billion to strengthen the country’s armed forces, including anti-submarine warfare to counter possible threats from Russia. As Britain nears its exit from the European Union, uncertainty in the industry may create supply chain disruptions.

READ THE FULL REPORT HERE 

James Cullum
Multimedia journalist James Cullum has reported for over a decade to newspapers, magazines and websites in the D.C. metro area. He excels at finding order in chaotic environments, from slave liberations in South Sudan to the halls of the power in Washington, D.C.

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