2018 Global aerospace and defense industry outlook

Executive summary

The global A&D industry will strengthen in 2018 as revenues are forecasted to increase by 4.1 percent, doubling last year’s 2.1 percent growth. The recovery of global gross domestic product (GDP), stable commodity prices, and heightened passenger travel demand are likely to ramp up growth in the commercial aircraft sector in 2018. On the defense sector side, heightened global security threats as well as higher defense spending from other major regional powers such as India, China, and Japan are likely to drive global defense sector revenue growth in 2018 and beyond.

This outlook reviews the performance of the A&D industry in 2017 and forecasts its growth in the coming years. It also outlines performance across major A&D markets and discusses trends that will impact the industry. The report forecasts the mergers and acquisitions activity in 2018 that lays the foundation for further growth in this space.

Key findings:

• Commercial aircraft sector revenues expected to grow 4.8 percent as production levels are likely to be robust while the defense sector revenues are likely to record 3.6 percent growth as the US defense budget returns to growth after experiencing multi-year declines.
• The spiraling demand for passenger travel is driving commercial aircraft production and is responsible for the record high backlog of 14,215 units at the end of 2017.
• Global defense spending is anticipated to grow at a CAGR of about 3.0 percent over the 2017–2022 period, crossing US$2 trillion by 2022.
• In 2018, global M&A activity is expected to remain strong in the aerospace sector, driven by pricing pressures from aircraft OEMs and their expansion of high-margin aftermarket services. This has pushed suppliers to consolidate for scale and cost effectiveness.