The annual military expenditure of Saudi Arabia is estimated to be $50.9bn in 2017 and reach $80.8bn by 2022, witnessing a compound annual growth rate (CAGR) of 7.54%, according to a report by Strategic Defence Intelligence (SDI).
Titled ‘Future of the Saudi Arabia Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2022’, the report evaluates the future trends of defence industry in Saudi Arabia.
The allocation for capital expenditure is projected to be an average of 45.2% during 2018-2022, while revenue expenditure allocation is estimated to be 54.8% of the country’s defence and security budget over the forecast period.
Defence spending is expected to be driven by the ongoing arms race among Middle East nations, growing instability in countries such as Syria, Iraq, and Yemen, and perceived threat from Iran.
The government of Saudi Arabia plans to invest in fighter and multi-role aircraft, border security, infantry fighting vehicles, main battle tanks, unmanned aerial vehicles, cyber security, submarines, computer network defence capabilities, and naval vessels, states the report.
The modernisation of defence systems and efforts to develop domestic military capabilities are expected to drive arms supplies, while lack of transparency, corruption, and unavailability of skilled labour are anticipated to hinder the growth of the Saudi Arabian defence industry.