The global aerospace & defense market is expected to grow from $736.36 billion in 2020 to $774.54 billion in 2021 at a compound annual growth rate (CAGR) of 5.2%.
The growth is mainly due to the companies rearranging their operations and recovering from the COVID-19 impact, which had earlier led to restrictive containment measures involving social distancing, remote working, and the closure of commercial activities that resulted in operational challenges.
The market is expected to reach $973.2 billion in 2025 at a CAGR of 6%.
The aerospace and defense market consists of sales of aircraft, aircraft components, weapons, artillery tanks, radar and other military equipment by entities (organizations, sole traders or partnerships) that produce aircraft, aircraft components, weapons, artillery tanks, radar and other military equipment for aerospace and defense purposes. The aerospace and defense market is segmented into aerospace and defense.
North America was the largest region in the global aerospace & defense market, accounting for 35% of the market in 2020. Asia Pacific was the second largest region accounting for 29% of the global aerospace & defense market. Africa was the smallest region in the global aerospace & defense market.
The outbreak of Coronavirus disease (COVID-19) has acted as a massive restraint on the aerospace & defense market in 2020 as supply chains were disrupted due to trade restrictions and manufacturing was affected due to lockdowns imposed by governments globally. COVID 19 is an infectious disease with flu-like symptoms including fever, cough, and difficulty in breathing. The virus was first identified in 2019 in Wuhan, Hubei province of the People’s Republic of China and spread globally including Western Europe, North America and Asia. Defense equipment manufacturers depend on supply of raw materials and parts from different countries across the globe. As many governments restricted the movement of goods across countries, manufacturers had to halt production due to lack of parts and raw materials. The outbreak is expected to continue to have a negative impact on businesses throughout 2020 and into 2021. However, it is expected that the aerospace & defense market will recover from the shock across the forecast period as it is a ’black swan’ event and not related to ongoing or fundamental weaknesses in the market or the global economy.
During the historic period, developed countries experienced low interest rates as monetary authorities reduced the interest rates to stimulate economic growth and prevent deflation. This led to the flow of cheap money for investment in these economies. Low interest rates encouraged borrowing for investment and helped drive spending. For instance, in 2019, the European Central Bank decreased interest rates to -0.5% on deposits from banks to encourage lending. Major countries that had low interest rates in the historic period include the USA, Germany and Japan. The low interest rates boosted the growth of the aerospace and defense market in historic period.
Source: Report Linker