Saudi Arabia continues to allocate a large percentage of its GDP to defense expenditure
Global Information Inc. would like to present a new market research report, "The Saudi Arabian Defense Industry: Market Opportunities and Entry Strategies, Analyses and Forecasts to 2017" by GlobalData.
The Saudi Arabian Defense Industry offers the reader insights into the market opportunities and entry strategies adopted by foreign original equipment manufacturers (OEMs) to gain market share in the Saudi Arabian defense industry.
In the wake of security threats, regional rivalry and the protection of its critical security infrastructure, the countrys defense expenditure is projected to grow over the forecast period. During the review period, Saudi Arabias capital expenditure allocation stood at 30% of the total defense budget, and is expected to be stable at 30% over the forecast period. Consequently, the share of revenue expenditure of the countrys total defense budget is expected to remain at 70% during the review period and increase to an average of 82% over the forecast period. The defense budget, which stood at 10.1% of GDP in 2010, is expected to decrease to 8.5% by 2016, as the countrys GDP growth rate is expected to outpace its defense expenditure growth rate.
Comment related to the graph: Saudi Arabia continues to allocate a large percentage of its GDP to defense expenditure. Approximately 30% of the countrys total defense budget will be earmarked for capital expenditure, which includes the cost of research and development (R&D), experimentation, procurement, maintenance, transportation and the storage of weaponry and equipment. However, the government currently allocates 70% of its defense budget to revenue expenditure, which includes the expenses incurred on training the 12,000 personnel in the countrys armed forces.
As a consequence of both internal and external threats, the government is projected to continue to spend an average of 8.6% of its GDP on defense. Meanwhile, high oil prices, substantial influxes of energy revenues and a global demand for petroleum will continue to support defense expenditure.
The Saudi Arabian Defense Industry provides a detailed analysis of the current industry size and growth expectations from 2011 2016, including highlights of key growth stimulators. It also benchmarks the industry against key global markets and provides detailed understanding of emerging opportunities in specific areas.
Irans advancement in long-range missile technology has forced Saudi Arabia to develop its own advanced air defense capabilities and demand is expected to particularly increase in the missile defense category. The demand for anti-ballistic missile systems is expected to be high over the forecast period, with the nations previous acquisitions of anti-ballistic missile systems aimed at countering Irans Shahab system.
Saudi Arabia is planning significant modernization of its naval infrastructure, which will drive the overall demand for maritime weaponry, including patrol aircraft. Regional tension and a rise in pirate attacks have caused the Saudi government to look for acquisitions in advanced maritime weaponry. Saudi Arabia has contacted the US to assist with the modernization plan, as well as supply a number of defense equipments.
Recently, Saudi Arabia awarded lead contractor, EADS, a multi-billion border security contract, one of the largest of such programs in the world. Two years ago, the country installed a hi-tech security razor wire fence and an integrated electronic surveillance system on its northern border. The current project is similar in nature, but involves the entire length of the Saudi Arabian border. The project, which is expected to deter terrorism, drugs and weapon trafficking, while monitoring illegal migration, is expected to increase the demand for sensors, imagery, radar, and infrared systems, software platforms and advanced communication systems.
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