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Russian Defense Market - Attractiveness, Competitive Landscape and Forecast to 2024

Russian Defense Market - Attractiveness, Competitive Landscape and Forecast to 2024

Summary

After two consecutive years of decline in defense expenditure in the years 2017 and 2018, Russian defense spending recovered in 2019 and is valued at US$46.1 billion for 2019. The total allocation for 2019 marks the first surplus budget for the Russian Federation. The country, buoyed by the recent recovery in oil and gas prices, is anticipated to steadily increase its funding for the defense sector. Russia’s defense expenditure is expected to register a CAGR of 5.46% over the forecast period to reach US$59.3 billion by 2024.Russian defense modernization has traditionally been funded by booming oil and gas profits; however, the crash in the global energy market resulted in an erosion of the country’s revenues and forced the country to adopt austerity measures to cut down on government expenditure during the historic period. As a consequence, Russian defense expenditure declined drastically from US$56.7 billion in 2016 to US$48.9 billion in 2017 and US$45.2 billion in 2018.With the recovery in global energy prices, Russia’s financial position has slowly started to improve, and the value of its Ruble has started to recover against the US dollar. Starting in 2019, Russian defense expenditure is anticipated to start reflecting a positive growth trend and increase from US$48 billion in 2020 to US$59.3 billion 2024, reflecting a CAGR of 5.46% 2020-2024. Russian defense capital expenditure is anticipated to witness concurrent growth, increasing from US$24.6 billion in 2020 to US$30.3 billion in 2024, reflecting a CAGR of 5.46%.The capital expenditure allocation, which stood at an average of 47.4% during the historic period, is expected to increase to an average of 51% over the forecast period, primarily due to Russia’s decision to build-up its forces in the Arctic, which is expected to drastically increase its funding to create infrastructure within the Arctic. The country is expected to focus on the modernization and procurement of C4ISR systems, transport aircraft, naval vessels, multirole aircraft, and conventional and nuclear submarines, among others. In November 2017, Russia unveiled its new modernized TU-160M2 Blackjack strategic bomber, which is scheduled to enter service by 2021.Russian homeland security (HLS) expenditure stood at US$37.1 billion in 2018 and recorded a CAGR of -9.57% during the historic period. However, it is expected to record a CAGR of 5.22% over the forecast period to value US$45.8 billion in 2023. This expenditure is primarily driven by the need to protect the country from cyber threats and to strengthen its border protection.Russian defense exports expected to increase over the forecast period. Aircraft accounted for 48.4% of Russia’s total arms exports during 2013-2017, as a result of strong international demand for the country’s Sukhoi and MiG fighter jets. Russian weapons and equipment are in high demand internationally, due to its affordability and performance standards. India, China, Vietnam, Algeria and Egypt are among Russia’s biggest defense export consumers but have reduced procurements over the last couple of years. As a result, the Russian government is now focusing on expanding its export market to countries in South America and Africa. Other major consumers of Russia’s military goods include Azerbaijan, Iraq, and Venezuela, among others.The report “Russian Defense Market - Attractiveness, Competitive Landscape and Forecast to 2024” offers detailed analysis of the Russian defense market with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.In particular, it provides an in-depth analysis of the following -

  • The Russian defense industry market size and drivers - detailed analysis of the Russian defense industry during 2019-2024, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country’s expenditure and modernization patterns
  • Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to capital expenditure and revenue expenditure. It also details the key challenges faced by defense market participants within the country
  • Porter’s Five Force analysis of the Russian defense industry: analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry
  • Import and Export Dynamics: analysis of prevalent trends in the country’s imports and exports over the last five years
  • Market opportunities: details of the top five defense investment opportunities over the next 10 years
  • Competitive landscape and strategic insights: analysis of the competitive landscape of the Russian defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.
Scope
  • Russia’s defense expenditure in 2019 values US$46.4 billion, recording a CAGR of -3.11% during the historic period, and is expected to cumulatively value US$268.4 billion over the forecast period. Russia, as the largest country in the world, spans across an area of 17.1 million km² and therefore has the longest land border in the world. The country shares its land borders with 16 different countries, and also shares maritime borders with Japan, via the sea of Okhotsk, and the US state of Alaska, across the Bering Strait. The country remains deeply distrustful of the expansion of the NATO alliance and perceives it to intrude within its sphere of influence. The need to deter NATO is anticipated to fuel investments in the Russian defense sector and the country is expected to progressively increase defense spending.
  • During the historic period, the Russian government allocated an average of 47.4% of its total defense budget to capital expenditure and the remaining 52.6% to revenue expenditure. Capital expenditure is expected to increase over the forecast period to an average of 51%, owing to the Russian government’s decision to speed up its defense modernization program under its new State Armaments Program (SAP) 2027.
  • The MoD is expected to mainly invest in Critical Infrastructure Protection (CIP), land based C4ISR, and airborne C4ISR capabilities.
Reasons to buy
  • This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Russian defense industry market trends for the coming five years
  • The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period
  • Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector
  • A deep qualitative analysis of the Russian defense industry covering sections including demand drivers, Porter’s Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts
Companies mentioned: United Aircraft Corporation (UAC), Sukhoi, Irkut Corporation, Rostec, Uralvagonzavod (UVZ), Splav, KBP Instrument Design Bureau, V.A.Degtyarev Plant, Kalashnikov Concern, Oboronprom Corporation, United Engine Corporation (UEC), Tactical Missiles Corporation,Almaz-Antey, Kurganmashzavod, and United Shipbuilding Corporation (USC).


  • Introduction
    • What is this Report About?
    • Definitions
    • Summary Methodology
    • About GlobalData
  • Executive Summary
    • Table Figure 1: Russian Analysis of Defense Budget: 2020 and 2024
    • Table Figure 2: Russian Defense Imports/Exports: 2014 and 2018
  • Market Attractiveness and Emerging Opportunities
    • Table Figure 3: Russian Top Five Prospective Procurements/Developments
    • Current Market Scenario
      • Primary Threat Perception
        • Table Figure 4: Russian National Security Threats
      • Military Doctrine and Strategy
      • Procurement Programs
        • Table Russian – On-going Development and Procurement Programs
        • Table Russian – Future Procurement Programs
      • Top Procurement Programs by Value (US$ Million) over 2019–2024
        • Table Top Russian Defense Procurement Programs by Value (US$ Million), 2019–2024
      • Social, Political and Economic Environment and Support for Defense Projects
      • Political and Strategic Alliances
        • Table Figure 5: Russia Partner Countries for Defense Cooperation and Military Training
        • Table Russian Defense Cooperation
        • Table Russian Military Training Exercises
    • Defense Market Size Historical and Forecast
      • Russia's defense budget to grow at a CAGR of 5.46% to value US$59.3 billion by
        • Table Russian Defense Expenditure (RUB Billion and US$ Billion), 2015–2024
        • Table Figure 6: Russian Defense Expenditure (RUB Trillion), 2015–2024
        • Table Figure 7: Russian Defense Expenditure (US$ Billion), 2015–2024
      • Military modernization and defense exports to drive defense expenditure over the
        • Table Percentage Share of Modern Defense Equipment within Russian Inventories, 2013–2020
      • Defense expenditure as a percentage of GDP is expected to average 3.6% over
        • Table Russian GDP Growth and Defense Expenditure as a Percentage of GDP Growth, 2015– 2024
        • Table Figure 8: Russian GDP Growth vs Defense Expenditure as a Percentage of GDP Growth, 2015– 2024
    • Analysis of Defense Budget Allocation
      • The majority of Russia's defense budget is expected to be allocated to revenue
        • Table Russian Defense Budget Split Between Capital and Revenue Expenditure (%), 2015– 2024
        • Table Figure 9: Russian Defense Budget Split Between Capital and Revenue Expenditure (%), 2015– 2024
      • Capital expenditure is expected to record a CAGR of 5.33% over the forecast
        • Table Russian Defense Capital Expenditure (RUB Billion and US$ Billion), 2015–2024
        • Table Figure 10: Russian Defense Capital Expenditure (RUB Trillion), 2015–2024
        • Table Figure 11: Russian Defense Capital Expenditure (US$ Billion), 2015–2024
      • Status of critical projects in key sectors:
        • Table Key Electronic Warfare Systems
        • Table Key Long Range Ballistic Missile Programs
        • Table Ongoing Nuclear Delivery Platform Programs
        • Table Ongoing Naval Modernization Programs
        • Table Key Tactical Attack Weapon Systems and Precision Guided Munitions Projects
        • Table Key Air Force Modernization Programs
        • Table Key Air Defense Programs
        • Table Key Air Force Transport Aircraft Modernization Programs
        • Table Key Programs for Development of Unmanned Systems
        • Table Key Army Modernization Programs
      • Per capita defense expenditure expected to increase over the forecast period
        • Table Russian Per Capita Defense Expenditure (US$), 2015–2024
        • Table Figure 12: Russian Per Capita Defense Expenditure (US$), 2015–2024
    • Homeland Security Market Size and Forecast
      • Russian homeland security expenditure forecast to reach US$39.4 billion by 2024
        • Table Russian Homeland Security Expenditure (RUB Trillion and US$ Billion), 2015–2024
        • Table Figure 13: Russian Homeland Security Budget (RUB Trillion), 2015–2024
        • Table Figure 14: Russian Homeland Security Budget (US$ Billion), 2015–2024
      • Border security and the fight against cyber-attacks are the main factors
    • Benchmarking with Key Global Markets
      • Russia's defense budget is expected to grow significantly over the forecast
        • Table Benchmarking with Key Markets – 2015–2019 vs 2020–2024
        • Table Figure 15: Benchmarking with Key Markets – 2015–2019 vs 2020–2024
      • Russia is among the world's largest defense spenders
        • Table Figure 16: Defense Expenditure of the World's Largest Military Spenders (US$ Billion), 2019 and 2024
      • Russia allocated 2.8% of its GDP to defense in 2019
        • Table Figure 17: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2019
    • Market Opportunities: Key Trends and Growth Stimulators
      • Top Defense Market Sectors by Value (US$ Million) - Projections over 2018-2023
        • Table Top Russian Defense Market Sectors by Value (US$ Million) – 2018–2023
      • Critical Infrastructure Protection (CIP) – Physical Security
        • Table Figure 18: Critical Infrastructure Protection (CIP) – Physical Security Market Size (US$ Million), 2019–2024
      • Land-based C4ISR
        • Table Figure 19: Land-based C4ISR Market Size (US$ Million), 2019–2024
      • Airborne C4ISR
        • Table Figure 20: Airborne C4ISR Market Size (US$ Million), 2019–2024
  • Defense Procurement Market Dynamics
    • Table Figure 21: Top Russian Defense Procurements in Terms of Their Supplier Relationships
    • Import Market Dynamics
      • The country's defense imports are low owing to a developed indigenous sector
        • Table Figure 22: Russian Defense Import Trend, 2014–2018 (TIV Values)
      • Ukraine was the key defense supplier to Russia
        • Table Figure 23: Russian Defense Imports by Country (%), 2014–2018
      • Aircraft and engines were the key defense imports during 2014–2018
        • Table Figure 24: Russian Defense Imports by Category (%), 2014–2018
    • Export Market Dynamics
      • Russia's exports witnessed an increasing trend during 2014–2018
        • Table Figure 25: Russian Defense Export Trend, 2014–2018 (TIV Values)
      • India, China, and Algeria are Russia's main defense equipment purchasers
        • Table Figure 26: Russian Defense Exports by Country (%), 2014–2018
      • Aircraft and ships account for the majority of Russia's defense exports
        • Table Figure 27: Russian Defense Exports by Category (%), 2014–2018
  • Industry Dynamics
    • Five Forces Analysis
      • Table Figure 28: Industry Dynamics – Porter's Five Forces Analysis
      • Bargaining Power of Supplier: Medium to High
      • Bargaining Power of Buyer: High
      • Barrier to Entry: High
      • Intensity of Rivalry: High
      • Threat of Substitution: High
  • Market Entry Strategy
    • Market Regulation
      • Entry into the defense sector is highly regulated
    • Market Entry Route
      • Budgeting Process
        • Table Russian Budget Formation Timetable
      • Procurement Policy and Process
    • Key Challenges
      • Table Figure 29: Russian Market Challenges
      • Russian government's aversion to Western defense technology
      • Sanctions on Russian defense entities constrains market opportunities
  • Competitive Landscape and Strategic Insights
    • Competitive Landscape Overview
      • Table Top Defense Suppliers in the Russian Defense Industry By Value (US$ Million), 2019–2024
      • Russian Market Share Analysis, 2019–2024
        • Table Figure 30: Russian Market Share Analysis, 2019–2024
        • Table Competitive Landscape of the Russian Defense Industry
      • The domestic industry is consolidating to provide better focus and fund
      • Defense sector is dominated by domestic firms, with no foreign presence
    • Key Domestic Companies
      • United Aircraft Corporation – Overview
      • United Aircraft Corporation – Products
        • Table United Aircraft Corporation – Products
      • United Aircraft Corporation – Recent Announcements and Strategic Initiatives
      • United Aircraft Corporation – Alliances
        • Table United Aircraft Corporation – Alliances
      • United Aircraft Corporation (UAC) – Recent Contract Awards
        • Table United Aircraft Corporation (UAC) – Recent Contract Wins
      • United Aircraft Corporation (UAC) – Financial Analysis
        • Table Figure 31: United Aircraft Corporation (UAC) – Revenue Trend Analysis (RUB Billion), 2012– 2016
        • Table Figure 32: United Aircraft Corporation (UAC) – Operating Profit Trend Analysis (RUB Billion), 2012–2016
        • Table Figure 33: United Aircraft Corporation (UAC) – Net Profit Trend Analysis (RUB Million), 2012– 2016
      • Sukhoi – Overview
      • Sukhoi – Products
        • Table Sukhoi – Products
      • Sukhoi – Recent Announcements and Strategic Initiatives
      • Sukhoi – Alliances
        • Table Sukhoi – Alliances
      • Sukhoi – Recent Contract Awards
        • Table Sukhoi – Recent Contract Wins
      • Irkut Corporation – Overview
      • Irkut Corporation – Products
        • Table Irkut Corporation – Products
      • Irkut Corporation – Recent Announcements and Strategic Initiatives
      • Irkut Corporation – Alliances
        • Table Irkut Corporation – Alliances
      • Irkut Corporation – Recent Contract Wins
        • Table Irkut Corporation – Recent Contract Wins
      • Irkut Corporation – Financial Analysis
        • Table Figure 34: Irkut Corporation – Revenue Trend Analysis (RUB Billion), 2014–2018
        • Table Figure 35: Irkut Corporation – Operating Profit (RUB Million), 2014–2018
        • Table Figure 36: Irkut Corporation – Net Profit Trend Analysis (RUB Million), 2014–2018
      • Rostec – Overview
      • Rostec – Products
        • Table Rostec – Products
      • Rostec– Recent Announcements and Strategic Initiatives
      • Rostec – Alliances
        • Table 5.2.21 Rostec – Alliances
      • Rostec – Recent Contract Awards
        • Table Rostec – Recent Contract Wins
      • Uralvagonzavod – Overview
      • Uralvagonzavod – Products
        • Table Uralvagonzavod – Products
      • Uralvagonzavod – Recent Announcements and Strategic Initiatives
      • Uralvagonzavod – Alliances
        • Table Uralvagonzavod – Alliances
      • Uralvagonzavod – Recent Contract Wins
        • Table Uralvagonzavod – Recent Contract Wins
      • Splav – Overview
      • Splav – Products
        • Table Splav – Products
      • Splav – Recent Announcements and Strategic Initiatives
      • Splav – Alliances
        • Table Splav – Alliances
      • KBP Instrument Design Bureau – Overview
      • KBP Instrument Design Bureau – Products
        • Table KBP Instrument Design Bureau – Products
      • KBP Instrument Design Bureau – Recent Announcements and Strategic
      • KBP Instrument Design Bureau – Recent Contract Wins
        • Table KBP Instrument Design Bureau – Recent Contract Wins
      • V.A.Degtyarev Plant – Overview
      • V.A.Degtyarev Plant – Products
        • Table V.A.Degtyarev Plant – Products
      • Kalashnikov Concern – Overview
      • Kalashnikov Concern – Products
        • Table Kalashnikov Concern – Products
      • Kalashnikov Concern – Recent Announcements and Strategic Initiatives
      • Kalashnikov Concern – Alliances
        • Table Kalashnikov Concern – Alliances
      • Oboronprom Corporation – Overview
      • Oboronprom Corporation – Products
        • Table Oboronprom Corporation – Products
      • Oboronprom Corporation – Recent Announcements and Strategic
      • Oboronprom Corporation – Alliances
        • Table Oboronprom Corporation – Alliances
      • Oboronprom Corporation – Recent Contract Wins
        • Table Oboronprom Corporation – Recent Contract Wins
      • United Engine Corporation (UEC) – Overview
      • United Engine Corporation (UEC) – Products
        • Table United Engine Corporation (UEC) – Products
      • United Engine Corporation (UEC) – Recent Announcements and
      • Tactical Missiles Corporation: Overview
      • Tactical Missiles Corporation – Products
        • Table Tactical Missiles Corporation – Products
      • Tactical Missiles Corporation – Recent Announcements and Strategic
      • Tactical Missiles Corporation – Alliances
        • Table Tactical Missiles Corporation – Alliances
      • Tactical Missiles Corporation – Recent Contract Wins
        • Table Tactical Missiles Corporation – Recent Contract Wins
      • Almaz-Antey – Overview
      • Almaz-Antey – Products
        • Table Almaz-Antey – Products
      • Almaz-Antey – Recent Announcements and Strategic Initiatives
      • Almaz-Antey – Alliances
        • Table Almaz-Antey – Alliances
      • Almaz-Antey – Recent Contract Wins
        • Table Almaz-Antey – Recent Contract Wins
      • Kurganmashzavod – Overview
      • Kurganmashzavod – Products and Services
        • Table Kurganmashzavod – Products and Services
      • Kurganmashzavod – Recent Announcements and Strategic Initiatives
      • Kurganmashzavod – Alliances
        • Table Kurganmashzavod – Alliances
      • Kurganmashzavod – Recent Contract Wins
        • Table Kurganmashzavod – Recent Contract Wins
      • United Shipbuilding Corporation – Overview
      • United Shipbuilding Corporation (USC) – Products and Services
        • Table United Shipbuilding Corporation (USC) – Products and Services
      • United Shipbuilding Corporation (USC) – Recent Announcements and
      • United Shipbuilding Corporation – Recent Contract Wins
        • Table United Shipbuilding Corporation – Recent Contract Wins
  • Business Environment and Country Risk
    • Economic Performance
      • GDP Per Capita, US$
        • Table Figure 37: GDP Per Capita in US$, 2015–2025
      • GDP (Current US$ Billion)
        • Table Figure 38: GDP (Current US$ Billion), 2015–2025
      • Exports of Goods and Services (LCU Billion)
        • Table Figure 39: Exports of Goods and Services (LCU Billion), 2005–2014
      • Imports of Goods and Services (LCU Billion)
        • Table Figure 40: Imports of Goods and Services (LCU Billion), 2005–2014
      • Gross National Disposable Income (US$ Billion)
        • Table Figure 41: Gross National Disposable Income (US$ Billion), 2008–2013
      • LCU per US$ (Period Average)
        • Table Figure 42: LCU Per US$ (Period Average), 2015–2024
      • Market Capitalization of Listed Companies (US$ Billion)
        • Table Figure 43: Market Capitalization of Listed Companies (US$ Billion), 2005–2012
      • Market Capitalization of Listed Companies (% of GDP)
        • Table Figure 44: Market Capitalization of Listed Companies (% of GDP), 2005–2012
      • Government Cash Surplus/Deficit as a Percentage of GDP (LCU)
        • Table Figure 45: Government Cash Surplus/Deficit as a Percentage of GDP (LCU), 2005–2012
      • Goods Exports as a Percentage of GDP
        • Table Figure 46: Goods Exports as a Percentage of GDP, 2005–2014
      • Goods Imports as a Percentage of GDP
        • Table Figure 47: Goods Imports as a Percentage of GDP, 2005–2014
      • Services Imports as a Percentage of GDP
        • Table Figure 48: Service Imports as a Percentage of GDP, 2005–2014
      • Services Exports as a Percentage of GDP
        • Table Figure 49: Services Exports as a Percentage of GDP, 2005–2012
      • Foreign Direct Investment, net (BoP, current US$ Billion)
        • Table Figure 50: Foreign Direct Investment, Net (BoP, Current US$ Billion), 2005–2014
      • Net Foreign Direct Investment as a Percentage of GDP
        • Table Figure 51: Net Foreign Direct Investment as a Percentage of GDP, 2005–2014
      • Mining, Manufacturing, and Utilities Output (LCU Billion)
        • Table Figure 52: Mining, Manufacturing, Utilities Output (LCU Billion), 2005–2014
  • Appendix
    • Disclaimer

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