2017 Global aerospace and defense sector outlook

The 2017 Global aerospace and defense sector outlook reviews the sector’s performance in 2016 and outlines a projection for aircraft production for 2017 and beyond, as well as defense spending by major countries. It also provides perspectives on defense contractor expectations, the anticipated impact of the lower oil prices on aircraft sales, the increase in travel demand, driven by global demographics and wealth creation in Asia and the Middle East and the impact on the commercial aerospace subsector.

This year’s outlook finds global aerospace and defense (A&D) industry revenues expected to resume growth, driven by higher defense spending.

In 2017, the industry is expected to return to growth on 2.0 percent. 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:

Commercial aerospace sub-sector

• Stable global gross domestic product (GDP) growth, relatively lower commodity prices including crude oil, strong passenger travel demand, especially in the Middle East and Asia Pacific region, will likely drive the commercial aerospace sub-sector growth.
• However 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

• The defense sub sector is expected to grow 3.2% in 2017. Growth is expected to be primarily driven by the newly elected US Administration’s increased focus on strengthening the nation’s military.
• Rising global tensions has led to international demand for defense and military products is increasing 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, India, South Korea, Japan, India, China, Russia – many of these countries have already started to increase purchases of next generation military equipment.