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: 8 September 2020
Concern over the spread of Covid-19 remains volatile while business optimismis growing.
After weeks of gradual decline, GDP estimates for many countries have levelled off.
The current 2020 consensus forecast for GDP growth. Negative GDP growth is forecast in all countries except China.
Fitch Ratings revised its 2020 forecast for the global economic growth to -4.4% from the earlier -4.6%. estimate.
Impact of Covid-19 on employment
- Impact on M&A activity -
Since January, M&A volumes have fallen off a cliff
- The deals index shows the steepest decline since January 2020.
- No sector stands out, with volumes crashing across the board. Extensive lockdowns in major economies have made deal-making difficult.
- Business priorities have changed and this will impact acquirers' M&A strategy. Expect more investments in weak business areas highlighted by the Covid-19 crisis, e.g. digitalisation and cybersecurity.
- Well capitalised US and Chinese big tech firms will likely go on a spending spree in H2 2020. China's plans could be hindered due to increased scrutiny by regulators.
- Expect 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.