The 2017 Global aerospace and defense outlook by reviews the industry’s financial performance in 2016 and expectations for 2017
The analysis by Deloitte outlines a long-term forecast for aircraft production, as well as an analysis of global defense spending. It also provides perspectives on defense contractor expectations, growth in travel demand driven by wealth creation in Asia and the Middle East, and observations on what travel demand means for the commercial aerospace sub-sector.
This year’s outlook finds global aerospace and defense industry revenues expected to resume growth, driven by higher defense spending.
Trends forecast a return to growth
The global aerospace and defense industry is likely to experience stronger growth in 2017. Following multiple years of positive but a subdued rate of growth, the report forecasts the sector revenues will likely grow by about 2.0 percent in 2017.
The global A&D sector revenue rebound is attributed to a number of factors in both the commercial aerospace sub-sector and the defense sub-sector. Key findings are as follows:
Commercial aerospace sub-sector analysis
- Stable global gross domestic product (GDP) growth, relatively lower commodity prices including crude oil, and strong passenger travel demand, especially in the Middle East and Asia Pacific regions, will likely drive the commercial aerospace sub-sector growth.
- Despite an expected increase of 96 additional large commercial aircraft being produced in 2017, continued pricing pressure and product mix changes by airline operators will likely result in only a marginal increase of 0.3 percent in commercial aerospace sub-sector revenues.
Defense sub-sector analysis
- Defense sub-sector revenues are likely to grow at a much faster 3.2 percent in 2017 as defense spending in the US has returned to growth after multi-year declines in defense budgets, and future growth many be driven by the new US administration’s increased focus on strengthening the US military.
- Rising global tensions have led to increasing demand for defense and military products in the Middle East, Eastern Europe, North Korea, and the East and South China Seas. This is in turn resulting in increased defense spending globally, especially in the United Arab Emirates (UAE), Saudi Arabia, South Korea, Japan, India, China, Russia.
You can reach the full report here below.