Impact expected to be less severe than the 2009 global financial crisis.
While the performance of defense markets has remained robust throughout COVID-19, the economic and fiscal impact of the pandemic mean that there are likely harder times ahead for the defense sector, especially in the West. Nevertheless, the coming downturn is highly unlikely to be as severe as the one which followed the 2009 global financial crisis. The full impact of any post-COVID-19 defense spending cuts may not become apparent until 2025.
Budgets have remained largely unchanged last year, but past downturns demonstrate that cuts to government spending normally lag the economic impact by several years. Past trends also show that the impact will vary from region, and not all countries will see downward pressure on defense spending over the coming years.
As with the period following the global financial crisis in 2009, constraints are likely to be more acute in the West, where the economic impact has been most severe and the costs of government support and stimulus packages have been greatest. Further east, conditions appear far more positive, with budgets throughout the Asia-Pacific region expected to continue to expand at robust rates following a brief slowdown.
