Several countries in the GCC region are spending extensively in their respective defense sectors to strengthen their national security. However, these expenses are sent majorly to contractors of other nations. Hence, countries across the GCC region must increasingly focus on local defense manufacturing capabilities to boost their economy.
Besides, another reason Gulf countries are raising investments in their defense sectors is the increasing geopolitical tensions among them. Hence, with the approach toward local manufacturing, these countries are anticipated to display vibrant growth in their manufacturing sectors & generate significant growth opportunities.
Gulf countries have a competitive edge of massive military budgets, the ability to learn from the other regions, and a drive to bring greater efficiency in their defense bases. In the coming years, several prominent defense equipment manufacturers shall work directly with the governments & militaries of different countries in the GCC region under the umbrella of joint management & risk-sharing initiatives to enable better transparency & information sharing. Besides, the contractors for various defense equipment shall become more proactive in developing & procuring defense systems in the years to come.
The GCC Defense Market is projected to grow at a CAGR of around 2.12% during the forecast period, i.e., 2021-26. The market is driven principally by the rapidly increasing & existing geopolitical tensions among different countries across the GCC region entwined with their growing focus on strengthening national security with massive investments and procurement of advanced defense equipment & weapons.
|Study Period||Historical Data: 2017-20|
|Base Year: 2021|
|Forecast Period: 2022-27|
|Country Covered||Saudi Arabia, UAE, Qatar, Kuwait, Bahrain, Oman|
|Key Companies Profiled||Saudi Arabian Military Industries, Emirates Defence Industries Company, Advanced Electronics Company, Military Industries Corporation, Dahra Engineering & Security Services LLC, Lockheed Martin Corporation, The Boeing Company, Elbit Systems Ltd, Israel Aerospace Industries, Raytheon Company, Rheinmetall AG, Aselsan AS, Northrop Grumman Corporation, Thales SA, Honeywell International Inc., BAE Systems PLC, Rockwell Collins, L3 Technologies Inc., Airbus SE, Leonardo SpA.)|
|Unit Denominations||USD Million/Billion|
In addition, these countries are working on improving their local defense manufacturing. With more lethality, range, & flexibility in weapons, different GCC countries are inclined toward advancing these weapons & other equipment like combat ships, jets, missile defense systems, etc. Although several technologies are yet to enter the market and are in their developmental phases, different countries & their respective militaries are seeking autonomous weapon technology and testing weapons that could fight on their own.
In recent years, different countries in the region have inclined more toward equipment modernization and displayed a shift from outsourced & offshore maintenance to onshore Maintenance, Repair & Overhaul (MRO) contractors. Additionally, the market shall also expand due to a greater influence of local military capabilities across the GCC region to support secured supplies of defense equipment, operational sovereignty, & display a source of pride. It, in turn, would also create job opportunities for local talents, increase research & development activities, and enable economies to diversify their resources away from the oil & gas sector.
Impact of Covid-19 on the GCC Defense Market
The Covid-19 pandemic in 2020 catastrophically impacted most industries across the GCC region. However, the GCC Defense Market underwent a moderate effect of the crisis. The governments of different countries in the region imposed stringent movement restrictions & lockdown to curb the spread of this dreadful disease, which led to supply chain disruptions, shortage of raw materials, challenges associated with logistics, & reduced defense expenditure, among others. Additionally, investments in several research & development activities & business expansion got reduced to resist the decline in revenue & operating performance of the market.
Besides, since most countries across the region were investing in resources to address the various issues associated with the pandemic, there were delayed purchase orders in the defense sector throughout 2020. However, with the gradual improvement in the situation, governments uplifted restrictions and allowed the recommencement of business operations.
The supply chains are back on track, with deliveries & distribution of defense equipment regaining their momentum across the region. As a result, the market is anticipated to generate remunerative growth opportunities for the leading players in the coming years.