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THE BIG PICTURE
26
EADS ANNUAL REVIEW 2010
Markets & Perspectives
Early indications of increased demand
The global economy returned to growth faster than
expected in 2010, with emerging markets leading the
recovery. After suffering less than advanced economies in
the 2008-2009 recession, they rebounded most quickly.
Advanced economies also returned to growth but were
restrained by high levels of public and private sector debt,
high unemployment and low consumer confidence. For
2011, the International Monetary Fund (IMF) expected
global growth of 4.2%, with developing economies
growing at 6.4% and advanced ones at 4.2%1).
Trends over the past decades indicate a strong correlation
between the rate of growth in the economy at large and
the rate of growth in air traffic. Air traffic growth in turn
drives demand for new passenger aircraft. Defence,
security and space businesses are driven to a greater
extent by government demand. Growth in these sectors
is more closely related to government budgets as well as
strategic priorities and public perceptions of threat.
Fragility remains
Yet continued financial market volatility shows how fragile
economic recovery remains in developed markets, with
financial markets questioning the ability of sovereign nations
to repay their debts. In particular, peripheral Europe’s
sovereign debt crisis illustrates the challenges faced.
Government finances are weak across most of the
developed world, causing severe public spending cuts.
By contrast, many developing nations have no such
spending constraints – a fact that is evident in their
defence and space budgets.
Recent social unrest in parts of the Middle East and North
Africa has also raised concerns about fuel supply and
possible implications for global economic growth.
Air passengers return
Air traffic is highly sensitive to economic growth. The
International Air Transport Association (IATA) reported
full-year 2010 demand statistics for international scheduled
air traffic that showed an 8.2% increase in the passenger
business and a 20.6% increase in freight.
The world’s economic centre of gravity is shifting, with
far-reaching consequences for the aerospace industry.
Growth in emerging countries helped to mitigate
the effects of the economic crisis, supporting recovery
in Europe and the US. While countries such as China
appear to be nurturing future competitors, the aerospace
industry cannot ignore new opportunities arising out of
global partnerships.
The world economy enters recovery mode
1) IMF forecasts October 2010.