Saudi Arabian Defense Sector to Reach US$54.9bn in 2015

Monday 18 April 2011, Amsterdam

The Saudi Arabian defense sector, estimated to be worth US$39.9 billion in 2009, is one of the largest defense markets globally. During 2004-09, the country's defense expenditure grew at a CAGR of 13.82%, and is expected to record a CAGR of 5.48% during 2010-15 to reach US$54.9 billion in 2015. The key drivers of this growth in expenditure include increases in cross-border insurgency, domestic unease with the ruling regime, the rising number of Al Qaeda training camps, focus on oil infrastructure security, and the country's regional rivalry with Iran to emerge as the most influential nation in the Middle East. This significant defense budget, together with limited existing domestic capabilities in the sector, is attracting foreign OEMs into the market.

The robust economy of the Saudi Arabia enables it to invest large amounts of money in the procurement of defense equipment and, indeed, during 2010-15, the nation is expected to spend an average of 9% of its GDP on its defense sector. The country has always prioritized its defense spending and, although the nation registered negative economic growth in 2009, its military spending increased from the previous year's figures. As this trend is expected to continue in the medium-term, the Saudi Arabian defense sector is set to offer a plethora of opportunities to foreign OEMs.

Companies analysed:
# BAE Systems Plc
# EADS N.V.
# General Dynamics Corporation
# Lockheed Martin
# Science Applications International Corporation
# Sikorsky Aircraft Corporation
# Thales, Boeing
# Northrop Grumman Corporation
# Rolls Royce
# Advanced Electronics Company
# Al Salam Aircraft Company.