Global arms sales surged to record $679B last year
What's the story
The world's top 100 defense companies raked in an estimated $679 billion in sales last year, a new report by the Stockholm International Peace Research Institute (SIPRI) has revealed. The surge is mainly attributed to the ongoing wars in Ukraine and Gaza, with governments scrambling to purchase weapons and replenish their depleting stockpiles. The figure marks a nearly 6% increase from the previous year and a whopping 26% jump since 2015.
Regional impact
Europe leads global arms sales surge
The demand for arms has been "mostly driven by Europe," SIPRI researcher Jade Guiberteau Ricard said. He attributed this to the war in Ukraine and European states' perception of Russia as a threat. Even countries not directly supplying Kyiv have been expanding and modernizing their militaries, which could create a new source of demand, Ricard added.
Market leaders
US dominates global manufacturing
The United States continues to dominate the global arms manufacturing industry, with 39 of the top 100 companies based there. These include Lockheed Martin, RTX, and Northrop Grumman. Together, these American manufacturers accounted for $334 billion in sales, almost half of the world's total. Despite budget overruns and delays affecting key US-led programs like F-35 fighter jet and Columbia-class submarine projects, revenues have continued to rise.
Revenue increase
European arms manufacturers see significant growth
European arms manufacturers also witnessed a major revenue spike, with 26 companies from the region posting a 13% increase to $151 billion. Czech-based Czechoslovak Group led this surge, its sales skyrocketing by nearly 200% as it supplied artillery ammunition to Ukraine. However, sourcing materials has become increasingly challenging for these companies due to factors like Chinese export restrictions on critical minerals, and the need for new suppliers after Russia's invasion of Ukraine in 2022.
Resilience
Russian industry defies sanctions, shortages
Despite international sanctions and a shortage of components, Russia's defense industry, represented by Rostec and United Shipbuilding Corporation, posted a 23% revenue increase. This growth was fueled by domestic demand compensating for falling exports. However, SIPRI noted that the Russian arms industry is struggling to find enough skilled labor to support its projected production rates needed for sustaining its military objectives.
Market dip
Asia-Pacific region witnesses decline in sales
The Asia-Pacific region was the only one to witness a slight decline in arms sales, with revenues dropping 1.2% to $130 billion. This was mainly due to Chinese companies facing corruption allegations in procurement, leading to major contracts being postponed or canceled. However, Japanese and South Korean firms still managed strong growth largely to European demand for their products.