As of early April, the impact of the virus has forced many regional defence firms to halt industrial activities, while companies in East Asia are ramping up work close to pre-pandemic levels. Like in many sectors, working from home has become the norm.
While defence companies in the Asia-Pacific region have faced similar challenges – albeit in different periods of time – the longer-term impact of Covid-19 could be starkest in terms of defence funding. This could force regional countries to consider downsizing military modernisation initiatives or introduce spending rationalisation measures: something that the Japanese MoD has already indicated it is pursuing.
According to Janes Defence Budgets, the impact of the pandemic in the Asia-Pacific region could reduce cross-region defence spending by several percentage points, with the worst of the cuts coming in the early 2020s.
Another long-term requirement emerging from the Covid-19 crisis could be industrial restructuring and consolidation. This has been a trend in the Asia-Pacific defence industrial base in the past few years – especially in Northeast Asia – and could accelerate and expand if the impact of the virus persists.
Jon Grevatt, Asia-Pacific Defence Industry Analyst, Janes.Looking to read the full article?
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