Global defense trade up in 2013 as India, East Asia boost imports

Global defense trade expanded by US$2 billion to US$67 billion in 2013, buoyed in large part by strong import growth from India and Saudi Arabia and a surge in orders from East Asia.

India continued as the top defense importer globally, with US$5.9 billion in purchases. Major US export deliveries, including Boeing's P-8 Poseidon maritime surveillance aircraft, contributed to India's 42% increase in import expenditures in 2012.

Middle East markets comprised roughly US$18 billion, or more than one-quarter, of the total global defense trade market, with US defense companies accounting for half of all deliveries to the region. Notable among Middle Eastern importing countries was Saudi Arabia, whose purchases of Black Hawk helicopters and multirole tanker transport aircraft helped boost its import expenditures 46% year-over-year to US$5.4 billion, second only to India globally.

East Asian imports surged by more than 25% in 2013 to US$12.2 billion. Defense imports for China increased more than 50%, from US$1.5 billion in 2012 to US$2.3 billion in 2013, as it supplanted South Korea as the region's largest importer of defense equipment. Other major regional importers included Taiwan, Indonesia, and Thailand, which collectively accounted for a US$2.3 billion increase in import purchases year-over-year, largely for aerospace deliveries.

While the US remained the primary defense exporter to East Asia, Russia increased its exports to the region from roughly US$2.5 billion in 2012 to US$3.4 billion in 2013, mostly on increased engine and fighter jet trade with China. The big movers in this growing and highly competitive region, however, were China and South Korea, which overtook the United Kingdom, Italy, and Israel by doubling their exports to the region from 2012 to 2013.

South Korea increased its defense exports, not only regionally but also at global level to states such as Iraq, Turkey, and the United Kingdom. Its global exports doubled to US$0.6 billion in 2013 and by 2015 are forecast to surpass US$1.5 billion a year.

China's global defense sales increased from US$1.8 billion in 2012 to US$1.9 billion in 2013. However, as a defense exporter, it is almost wholly reliant on several economically challenged clients-primarily Pakistan, Bangladesh, and Venezuela. As its economic growth rate slows, China faces increasing internal reform challenges and may soon be unable to subsidize military export deals to these countries.

The US, meanwhile, continued as the world's largest overall defense exporter in 2013, with US$25.2 billion in sales, up 2.4% over 2012, but with growth rates falling. The US remained the largest supplier of defense equipment to Western Europe and is projected to widen its lead in exports to the region after the middle of the decade as European requirements for next-generation fighter aircraft-specifically F-35s-overshadow trans-European trade in naval, land, and air platforms. The total regional value of the F-35 trade could exceed US$29 billion during the coming decade.

Ben Moores Senior Analyst, IHS Aerospace & Defense Forecasting
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