world-economy

Defense, Power Sectors Positioned for Growth as Supply Chain Security Drives Investment

Defense and power generation emerge as the strongest performing sectors heading into 2027, according to KKR's mid-year outlook. The investment firm identifies supply chain resilience as a primary driver of capital allocation across industries. Companies and governments are prioritizing secure sourcing despite elevated input costs.

KKR expects productivity gains will concentrate economic growth in technology, high-end services, and government spending, leaving other sectors underperforming. Agriculture is gaining strategic importance alongside energy and critical minerals, driven by policy support and supply concerns. USDA forecasts U.S. wheat production for 2026-2027 will reach the lowest levels since 1972, underscoring food security priorities.

Regionally, Asia markets are positioned to outperform in public and private markets, with Japan and Korea expected to deliver upside earnings surprises in 2026 and 2027. The Chinese yuan is forecast to strengthen despite property sector headwinds.