Defense spending on the rise in the Middle East: report

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Despite a global decline, Defense spending is on the rise in the Middle East, Deloitte’s new report reveals

Defense spending also on the rise in India, China, Russia, South Korea, Brazil and Japan

Deloitte predicts 2014 to be another record year for commercial aerospace and continued declines in defense

weapons trade cold war
A soldier displays new technology at The Defence and Security Exhibition in London. ExCeL London is hosting the exhibition with hundreds of manufacturers from all over the world displaying their hardware. Photo – Peter Macdiarmid/Getty Images

Growing passenger travel demand in MENA to set records for aircraft production

The new Deloitte predictions report on Aerospace and Defense entitled the “2014 Global Aerospace and Defense Outlook” finds that global defense spending is declining, resulting mainly from reduced armed conflict in Iraq and Afghanistan and affordability concerns in many traditionally active military governments. However, defense spending is increasing in several areas of the globe, especially in the Middle East, India, China, Russia, South Korea, Brazil and Japan.

Many of these countries have produced the incremental wealth necessary to equip their militaries with modern defense platforms and technologies. Some of these countries have threats on their borders or in their geographies, all of which is contributing to an expectation of increased defense spending.

On the other hand, the commercial aerospace sector is expected to set records again for production of aircraft, due to the accelerated replacement cycle of obsolete aircraft with next generation fuel-efficient aircraft, and growing passenger travel demand, especially in the Middle East and the Asia Pacific regions.

This significant demand for new commercial aircraft will pressure supplier networks to continuously improve its engineering design, manufacturing and supply chain management capabilities, all the while being able to cost effectively meet tougher price concession requirements from customers.

Deloitte forecast a revenue growth in the 5 percent range for the overall industry in 2014.

Global aerospace and defense industry outlook
Global Aerospace and Defense Industry Outlook 2014. Infographic courtesy-Deloitte

“As we celebrate the 110th anniversary of the Wright Brothers’ first powered flight, we are reminded that the industry is still young, yet it has contributed much, with technology innovation at the heart of advancements in the industry,” explains Tom Captain, DTTL global aerospace and defense sector leader. “2014 and the rest of the decade promises to deliver even more exciting technology innovations that will focus on the way consumers travel by commercial aircraft, communicate via satellites, shop over the internet, conduct armed conflict when necessary, and assist with humanitarian missions to far reaches of the globe.”

Top 50 Global Defense Spenders

The U.S. remains the biggest defense spender in the world with approximately 39.1 percent of the total global spend. The next 5 include China, France, Japan, Russia and the United Kingdom.

The Stockholm International Peace Research Institute (SIPRI)’s Year Book 2013 estimates that the World military expenditure in 2012 to have reached $1.756 trillion. This corresponds to 2.5 per cent of world gross domestic product (GDP), or approximately $249 for each person in the world.

Top 50 Global defense spenders

To view the full 2014 Global Aerospace and Defense Industry outlook report, head over to Deloitte’s website:  at: http://bit.ly/KHqjHz

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