Future of the Saudi Arabia Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022
Saudi Arabia is one of the largest defense spenders in the world, behind the US, China, and Russia, with a military budget valued at US$50.9 Billion in 2017. The country is the largest market in the Middle East due to its robust economic and financial position backed by its oil exports. The rising tension with Iran, aggressive procurement strategies, and modernization programs, along with the need to strengthen its indigenous defense industry, are the main factors boosting the country’s military expenditure. Saudi Arabian defense expenditure is expected to increase from a projected US$60.5 Billion in 2018 to reach US$80.8 Billion by 2022 at a CAGR of 7.54%.
Saudi Arabia is making rapid strides in the military sector by becoming the fifth largest defense spender in the world. In 2015, the country briefly managed to displace Russia and emerge as the third largest defense spender, next only to that of the US and China. Saudi Arabia plans to source as much as 50% of its defense equipment from domestic defense companies in future and in May 2017, the Saudi Arabian Public Investment Fund (PIF), decided to create a national defense industry company - Saudi Arabian Military Industries (SAMI).
The country’s capital expenditure increased from US$20.4 Billion in 2013 to US$22.4 Billion in 2017, at a CAGR of 2.35%, attributed primarily to the drastic decline in global oil & gas prices worldwide. With Saudi Arabia deriving as much as 86% of its revenues from the export of Brent crude shipments, the continued low oil prices have impacted revenue inflows and caused the country’s economy to contract for two consecutive years in 2015 and 2016.
Homeland security is an area that has gained prominence in Saudi Arabia over the last decade, with expenditure expected to increase from US$25.8 Billion in 2017 to US$33.3 Billion in 2022 at a CAGR of 5.26%. With the revolution of Arab Spring in the Middle Eastern and the North African (MENA) region and minor protests in Riyadh, the country is expected witness growing expenditure to enhance security measures.
The US was the leading supplier of arms to Saudi Arabia, occupying a share of 46% with major contracts including the modernization of the Saudi M1A2 Tank fleet and E-3 AWACS, and supply of UH-60 helicopters among others. However, to enhance its domestic defense capabilities, the government introduced an Economic Offset Program, a tool to encourage foreign companies to establish joint ventures (JVs) with Saudi Arabia’s domestic organizations.
The report “Future of the Saudi Arabia Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2022” offers detailed analysis of the Saudi Arabian defense industry 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 Saudi Arabian defense industry market size and drivers: Detailed analysis of the Saudi Arabian defense industry during 2017-2021, 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 the army, navy, and air force. It also details the key challenges faced by defense market participants within the country.
- Porter’s Five Force analysis of the Saudi Arabian 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 Saudi Arabian defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis.
Companies mentioned in this report: BAE Systems Plc. , Airbus Group, General Dynamics Corporation, Lockheed Martin, Science Applications International Corporation (SAIC), Sikorsky Aircraft Corporation, Thales SA, Boeing, Northrop Grumman Corporation, Advanced Electronics Company (AEC) and Al Salam Aircraft Company.
- Saudi Arabia is one of the largest defense spenders in the world, behind the US, China, and Russia, with a military budget valued at US$50.9 billion in 2017. The country is the largest market in the Middle East due to its robust economic and financial position backed by its oil exports. The rising tension with Iran, aggressive procurement strategies, and modernization programs, along with the need to strengthen its indigenous defense industry, are the main factors boosting the country’s military expenditure.
- On a cumulative basis, the country is expected to invest US$352.9 billion for defense purposes, of which US$159.8 billion is earmarked for capital expenditure to fund defense procurements. The government’s well-defined military modernization plans along with its efforts to supress Houthi insurgency in Yemen as well as its support for rebel factions within Syria, are expected to stimulate the expenditure over the next few years
- The MoD is expected to invest in fighters and multirole aircraft, infrastructure construction and facilities management.
Reasons to buy
- This report will give the user confidence to make the correct business decisions based on a detailed analysis of the Saudi Arabian 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 Saudi Arabian defense industry covering sections including demand drivers, Porter’s Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts
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