2020 Global Aerospace and Defense Industry Outlook

Exploring aerospace and defense industry trends

The defense sector soared in 2019 as defense budgets increased. But production-related issues, cancellations, and fewer orders slowed growth in the commercial aerospace sector and the global aerospace and defense industry overall. Will things rebound in 2020? Long-term demand for commercial aircraft and innovative technologies may hold the answer.

After a strong year in 2018, the global aerospace and defense (A&D) industry has experienced descent in 2019. While the defense sector has continued to soar, growth in the commercial aerospace sector has slowed. In 2020, the A&D industry is expected to get back to its growth trajectory with the commercial aerospace sector recovering from its decline in 2019.The defense sector has sustained its growth in 2019 as security threats have intensified, requiring governments worldwide to continue increasing their defense budgets. Defense expenditure is expected to grow between 3 and 4 percent in 2020 to reach an estimated US$1.9 trillion, as governments worldwide continue to modernize and recapitalize their militaries. Most of the growth will likely be driven by increased defense spending in the United States, as well as in other regions, such as China and India.The commercial aerospace sector has experienced a decline in deliveries in 2019 due to production-related issues in certain aircraft models. Order backlog of commercial aircraft has also decreased from the 2018 peak levels of about 14,700 aircraft to slightly more than 14,000 at the end of August 2019.2 This was a result of order cancellations and a drop in new orders. However, commercial aerospace sector growth is likely to recuperate from 2020 onward as the long-term demand for commercial aircraft continues to remain robust, with nearly 40,000 units expected to be produced over the next two decades.

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