BEIRUT: Defense spending in the Middle East will continue to rise in 2014, bucking the global trend, while an increase in passenger travel demand in the region will spur growth in the commercial aerospace sector, according to Deloitte consultancy group.
“The global commercial aerospace sector is expected to sustain its significant revenue and earnings growth in 2014 underlined by extended record-setting production levels both at the platform and supplier base,” Deloitte said Wednesday.
“This is expected to be driven primarily by the accelerated replacement cycle of obsolete aircraft with next generation fuel-efficient aircraft, [and] the continued increases in passenger travel demand, especially in the Middle East and the Asia Pacific regions,” it added.
The sustained regional tensions in the Middle East are expected to see many countries equip their military with modern defense platforms and technologies, Deloitte’s report said.
“Some of these countries have threats on their borders or in their geographies, all of which is contributing to an expectation of increased defense spending.”
However, the global defense sector is forecasted to witness continued declines in revenue and earnings.
“This is primarily due to the cessation of a prolonged period of armed conflict in Iraq and Afghanistan, leading to lower budgets for traditional purchasers of military equipment,” the report said.
Overall revenue growth of 5 percent is expected in 2014 for the global aerospace and defense industry.
A version of this article appeared in the print edition of The Daily Star on January 15, 2014, on page 5.