The Saudi Arabian defense industry is valued
at US$52.9 billion in 2013 and is one of the largest defense markets globally.
During the review period (2009-13), the country’s defense expenditure grew at a
CAGR of 10.87%, and is expected to record a CAGR of 7.92% over the forecast
period (2014-18), to value US$77.3 billion by 2018. The key factors driving the
growth include increases in cross-border insurgency, domestic unease with the
ruling regime, the rising number of Al-Qaeda training camps in the country, an
increasing focus on oil infrastructure security, regional rivalry with Iran and
the desire to emerge as the most influential nation in the Middle East. Saudi
Arabia’s substantial defense budget, coupled with the limited capabilities of
domestic defense firms, is attracting foreign OEMs into the market. Saudi Arabia’s robust economy enables it to
invest large amounts of money in the procurement of defense equipment and, over
the forecast period, the nation is expected to increase its defense expenditure
to an average of 8.8% of Gross Domestic Product (GDP).
Rising tensions with Iran forced the country
to purchase American weapons at record levels in recent times. Since the nation
does not share a border with Iran, its arms purchases focused on expensive
warplanes and complex missile defense systems. The US$60 billion agreement with
Saudi Arabia that was formalized in 2012 included the purchase of 84 advanced
F-15 fighters, more than 100 helicopters, a variety of ammunition, missiles and
logistics support, and upgrades of 70 F-15 already in service. In addition to
upgrading its air force, the government is also entering into deals to
strengthen its ground forces.
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Saudi
Arabia is one of the world’s largest importers of military hardware and the
limited capacity of its emerging domestic defense industry means that the
country is heavily dependent on foreign arms. However, the government tried to
improve the situation by introducing an Economic Offset Program, a tool to
encourage foreign companies to establish joint ventures (JVs) with Saudi
Arabia’s domestic organizations. The country is likely to become one of the
five largest importers in the forecast period due to major outstanding orders
such as the F-15 combat aircraft from the US and the Typhoon combat aircraft
from the UK. With the US, Canada, and France already supplying armored vehicles
to Saudi Arabia, Germany is also expected to do so during the forecast period.
Over
the forecast period it is expected that key opportunities will emerge within
missile defense systems, helicopters, infantry fighting vehicles, tanks,
fighter planes, and unmanned aerial vehicles (UAVs).
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Reasons to buy
- Understand the historical performance of the
defense industry in this key Middle Eastern market, alongside future industry
projections.
- Gain insight into the key challenges and
opportunities identified by influential suppliers and buyers involved in Saudi
Arabia, enabling industry stakeholders to understand the business sentiment
prevailing in the industry.
- Promote
your capacity for growth by aligning your capabilities and business practices
with the changing needs of the Saudi Arabian market.
- Predict
how the Saudi national defense industry will grow, consolidate, and where it
will stagnate.
- Gain
access to primary survey research conducted by Strategic Defence Intelligence
across its B2B panels comprised of senior purchase decision makers and leading
supplier organizations.
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