BMI View: Fiscal pressures affecting Saudi Arabia in light of the slump in oil prices will weigh on militaryspending in the kingdom, but will not prevent robust expansion over the coming years. Saudi Arabia willremain one of the biggest spenders on defence equipment globally over the coming decade, amid Royadh'srivalry with Tehran, elevated threats from Islamist militancy, sectarian violence and social unrest. Efforts tosecure land borders, fight terrorism and assist allies in regional conflicts, especially through the kingdom'sintervention in Yemen, will drive procurement of ground and air equipment, while the need to protect thekingdom's territory and shipping routes from Iran will drive investment into strengthening naval, as well asair defence, capabilities. Developing the local defence sector under Vision 2030 will take many years, anddomestic defence companies' ability to meet requests for technologically advanced equipment will remainlimited over our forecast period.
As part of its Vision 2030 plan, the Saudi government is seeking to increase the share of defencespending on locally-produced equipment and services to 50% in the next 15 years.
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