At a time when developing countries are driving strong growth in aircraft orders, the global credit crunch has dented confidence in the short term. There are fears that the United States and Europe will both experience mild recessions, which might impact demand for aerospace and defence products.

For aerospace and defence companies, U.S. economic frailty has further weakened the dollar, undermining the competitiveness of European companies where falling currency hedging is increasing exposure.

Soaring prices for oil and other raw materials have created a further headwind to growth and stoked inflationary forces. Fierce competition for raw materials makes it harder to secure supplies. World titanium use in aircraft production alone is forecast to grow to 53,000 tonnes in 2008, up from 32,000 tonnes in 2004, according to the International Titanium Association.