Post-pandemic Growth Opportunity Analysis of the Defence Industry
Preparing for the Rebound
  • The global defence spending was recorded at $1.8 trillion in 2018; the highest spending recorded, to date. The COVID-19 epidemic is likely to reduce defence spending as governments around the world allocate funds for both fighting the pandemic and reviving the economy. COVID-19 is a dual crisis—public health and economic downturn—unlike any other preceding financial or health crisis. Stresses in the financial system led to the Global Financial Crisis of 2008 and the collapse of the stock market, followed by a decrease in demand due to lower per capita income. The Dotcom burst was led by a collapse of the stock market.

    Previous health emergencies, such as the outbreak of SARS or EBOLA, were limited in their geographical scope and the consequent effect on the world economy. COVID-19 is a supply-chain-led shock due to lockdown measures, which portends the winding down of businesses with consequent spill over onto demand and the financial system. The underlying demand and economy were healthy before the start of the crisis. Therefore, the restoration of supply and economy will depend on how quickly the disease is contained.

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