The COVID-19 pandemic has impacted the growth of the global defense industry as governments increase spending on efforts aimed at countering the public health and economic effects of the coronavirus, The Wall Street Journal reported Saturday.
Economic and logistical challenges due to the pandemic have disrupted defense sales, manufacturing and development, resulting in production irregularities and increasing costs for many defense contractors.
Some analysts say the contracting cycle’s multiyear nature appears to shield the defense industry from major volatility despite the challenges.
“Demand over the next two years is unlikely to be affected, since budgets for these projects had been allocated prior to the pandemic, and the projects are critical to national defense,” according to a Deloitte report.
Amid the slowdown, some U.S. companies continue to secure new defense contracts. The current administration cleared defense contracts in February, including an $85 million sale of Raytheon Technologies-made missiles to Chile and a $60 million transaction with Jordan for the procurement of Lockheed Martin-built F-16 jets.
The Pentagon increased its Defense Production Act spending from $64 million in 2019 to $135 million in 2020 to support U.S. contractors during the health crisis, according to the report.