News & Analysis
Covid-19 Executive Briefing
Understanding the economic impact of the Covid-19 pandemic and the implications for the defence sector
- ECONOMIC IMPACT -
Latest update: 16 June 2020
Global foreign direct investment flows are forecast to fall by up to 40% in 2020, from a value of $1.54tn in 2019, according to UNCTAD.
Global economic growth is forecasted to contract by 8.6% (YoY) in Q2 and bounce back to record a 3% growth in Q1 2021. (Morgan Stanley)
The British economy contracted sharply by 20.5% in April compared to 5.8% decline in March, according to the Office for National Statistics.
The Congressional Budget Office of the US foresees economic growth to contract by 11% in Q2 2020 and deficit to swell to $2tn in 2020.
Impact of Covid-19 on asset prices
- Sector Impact: Aerospace, Defence & Security -
Equity indices show the sector's recovery trajectory
Monthly M&A volumes (completed or announced, indexed to 100 in Jan 2019)
Jobs index, representing adjusted active jobs per company
Quarterly filings sentiment (green = positive, red = negative)
Impact On M&A activity
M&A volumes have fallen off a cliff since January 2020. Extensive lockdown measures in major economies made deal-making particularly difficult.
The M&A market will recover, but GlobalData explects to see fewer deals over $1bn in the short term.
Business priorities have changed and this will impact acquirers' M&A strategy.
Expect more investments in weak business areas highlighted by COVID-19 crisis, such as digitalisation and cybersecurity.