Saudi Arabia Takes Lead in Defense Imports
IHS has released its annual Global Defence Trade Report showing that Saudi Arabia has now topped India to become the largest importer of defense equipment and the number one defense equipment trading partner for the U.S.
In 2014, global defense trade increased for the sixth straight year to $64.4 billion, up from $56.8 billion. “Defense trade rose by a landmark 13.4 percent over the past year,” said Ben Moores, senior defense analyst at IHS Aerospace, Defence & Security. “This record figure has been driven by unparalleled demand from the emerging economies for military aircraft and an escalation of regional tensions in the Middle East and Asia Pacific.”
The U.S. supplied one-third of all defense exports and was the main beneficiary of the reported growth. Saudi Arabia and UAE together imported $8.6 billion in defense systems in 2014, more than the imports of Western Europe combined. The biggest beneficiary of the strong Middle Eastern market remains the U.S., with $8.4 billion worth of Middle Eastern exports in 2014, compared to $6 billion in 2013.
“Growth in Saudi Arabia has been dramatic and, based on previous orders, these numbers are not going to slow down,” Moores said.
Already the largest importer of weapons, Saudi Arabian imports increased by 54 percent between 2013 and 2014 and, based on planned deliveries, imports will increase by 52 percent to $9.8 billion in 2015. One out of every seven dollars spent on defense imports in 2015 will be spent by Saudi Arabia.
“When we look at the likely export addressable opportunities at a global level for the defense industry, five of the 10 leading countries are from the Middle East,” Moores said. “The Middle East is the biggest regional market and there are $110 billion in opportunities in coming decade.”
The second tier of exporters to the Middle East is led by the United Kingdom with $1.9 billion, the Russian Federation with $1.5 billion, France with $1.3 billion and Germany with $1 billion.
China and South Korea stand out in Asia Pacific
In 2014, China jumped from the world’s fifth to the third largest defense importer.
“China continues to require military aerospace assistance from Russia and its total defense procurement budget will continue to rise very quickly,” said Paul Burton, Director of Defence Industry & Budgets at IHS Aerospace, Defence & Security.
IHS forecasts that fast-emerging exporter South Korea will become a regional leader in the coming decade. Some $35 billion in new contracts will come online within the next decade, and the South Korean defense industry is forecast to win $6 billion in new business within East Asia.
Russia had record year, but a perfect storm awaits
Russia exported $10 billion in 2014, an increase of 9 percent from 2013. China was the largest recipient of equipment ($2.3 billion) followed by India ($1.7 billion), and Venezuela and Vietnam (each $1 billion).
After years of sales growth, Russian industry exports now face challenging times. A drop off in exports is forecast for 2015 as major programs draw to a close, a trend that could be accelerated by sanctions.
Furthermore, falls in oil prices are set to have a devastating impact on some lead Russian clients who are vulnerable to low oil prices, such as Venezuela and Iran. This problem is compounded as Chinese industry becomes increasingly less dependent on Russian technology.
The HIS report examines trends in the global defense market across 65 countries and is based upon 40,000 defense program deliveries from IHS Aerospace, Defence & Security’s Markets Forecast database.
The Data
Top Defense Importers 2013 Top Defense Importers 2014
1. India 1. Saudi Arabia
2. Saudi Arabia 2. India
3. UAE 3. China
4. Taiwan 4. UAE
5. China 5. Taiwan
6. Indonesia 6. Australia
7. South Korea 7. South Korea
8. Egypt 8. Indonesia
9. Australia 9. Turkey
10. Singapore 10. Pakistan
Top Defense Exporters 2013 Top Defense Exporters 2014
1. United States 1.United States
2. Russian Federation 2. Russian Federation
3. France 3. France
4. UK 4. UK
5. Germany 5. Germany
6. Israel 6. Italy
7. China 7. Israel
8. Italy 8. China
9. Sweden 9. Spain
10. Canada 10. Canada
Top Company Exporters 2013 Top Company Exporters 2014
1. Boeing 1. Boeing
2. Raytheon 2. Lockheed Martin
3. Lockheed Martin 3. Raytheon
4. Airbus Group 4. Airbus Group
5. UAC 5. UAC
6. BAE Systems 6. Russian Helicopters
7. Thales 7. United Tech Corp
8. United Tech Corp 8. BAE Systems
9. UralvagonZavod 9. Thales
10. Russian Helicopters 10. Finmeccanica