McKinsey: Global A&D Market to See APAC, Middle East Shift

McKinsey&CompanyA new report by McKinsey & Company indicates a positive outlook in the aerospace and defense industry in terms of global defense spending and market growth over the next three years.

John Dowdy and Elizabeth Oakes report that an October 2014 survey of senior executives at aerospace and defense companies points to a market shift from North America and Europe toward the Asia-Pacific region and the Middle East.

The report said that Mideast and APAC defense spending will grow up to 10 percent through 2017, while the West will continue to see a decline by up to 5 percent.

Dowdy and Oakes note that the main reason for this shift is the affordability of defense systems procured.

The McKinsey report includes the U.S. in the top three most attractive markets for companies seeking international growth, with the Middle East and India in the top two spots.

Aerospace and defense executives also identified growth areas in new lines of business such as cybersecurity, services and commercial aerospace.

They also see a moderate increase in acquisitions and divestitures over the next three years, the report said.

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