© 2015 IHS
Information | Analytics | Expertise
A Balance of Trade
Evolving Global Opportunities
MARCH 2015
Ben Moores, Senior [email protected]
Georgios Salapasidis, Senior [email protected]
Charles Forester, Senior Research [email protected]
© 2015 IHS
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A Balance of Trade:
Introduction
Methodology
I. What does DS Forecast data entail?
II. How was the DS Forecast data processed for the project?
What are the key findings?
Total global defence trade by:
I. Global Picture
II. Regional Developments
III. Country Deep Dive
IV. Market Specific Trends
V. Future Opportunities
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A Balance of Trade:
Project Methodology
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What’s in the Data?:
Standard IHS Aerospace & Defence Forecast Data
I. Deliveries not budgets
II. Bottom up Data collection
III. Global Coverage
IV. Only includes funds released to industry
V. No classified data/ Only publically sourced information
VI. Covers Production, R&D, Logistic support & Services
VII. Market Coverage – Munitions/ Small Arms Excluded
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A Balance of Trade:
Project Parameters
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What’s in the Data?:
Data Selection Process
I. End User organization scrutinized for non-military applications
II. Changed Russian Prime Contractor nomenclature
III. Country of Final Assembly provided the basis for export records
IV. Licensed production % allocated as an export
V. Removed Jointly funded projects with one country of final assembly
VI. Left with some 30,000 programs and program elements
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A Balance of Trade:
Key Observations
A BALANCE OF TRADE / MARCH 2015
Total global defence trade grew by the fastest rate since our records began
Saudi Arabia displaced India and is set to out perform the market
The Middle East continues to dominate in size and future opportunities
Aircraft remains the single biggest export segment but slowing.
Military vehicle exporter backlogs falling and opportunities limited
Sub-Saharan markets set to double to USD2 billion by the end of the forecast
Huge cyclical upcoming opportunities in Singapore, Qatar, Kuwait, Algeria, Brazil, Norway and Poland
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Total Global Defence Trade 2010-2015
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Global Procurement Expenditure 2010-2019
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Total Exports by Country 2014
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Defence Trade by East Asia 2013-14
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Country Assessment
Indonesia
Singapore
South Korea
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Indonesia – Imports and exports
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Imports• Imports driven by the acquisition of air and
sea platforms from South Korea
• Import of air and naval platforms expected to contribute to increased import volume in 2015
• 2016 uptick expected following deliveries of Russian aircraft, Airbus helicopters, and potentially Sigma frigates
Exports
• Low in 2014, but expect to more than double in 2015 with vehicle, ship deliveries
• Plans to introduce offset policy slowly gaining momentum – export facilitation could be a multiplier component
• Already some strong partnerships established in-country (Airbus, Denel)
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Exports Imports
Case study: Indonesia : imports and exports 2010-2016
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Singapore Imports
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Singapore Exports
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Singapore Opportunities
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South Korea Imports
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South Korea Exports
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South Korea Opportunities
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Defence Trade by West and Central Asia 2013-14
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Defence Trade by Oceania 2013-14
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Defence Trade by North America 2013-14
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Defence Trade by Latin America 2013-14
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Defence Trade by Eastern Europe 2013-14
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Country Assessment
Turkey
Russia
Ukraine
Poland
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Eastern European Imports: Future Prospects
The Eastern European Market will see noticeable growth in the mid-term as the most prominent importers have drafted ambitious procurement plans
Contracted imports for the region may reach $36bn to 2020
$20bn refer to Turkey, Poland, and Greece.
Opportunities for this region outvalue current market by 35%
Poland is set to increase defence spending from 2015 onwards and generate imports of up to $6bn within the next 5 years; funding is still at risk
Greece has several solid requirements pending but there are grave delays caused by financial hardship
Turkey is by far the most promising importer in the region with more than $10bn in prospected imports.
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2015 2016 2017 2018 2019 2020$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
Turkey
Greece
Poland
Co
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d I
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s (M
)
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$500
$1,000
$1,500
$2,000
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Turkey
Greece
Poland
Co
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O
pp
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)
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Case Study: Turkish Imports
Contracted Imports show stable spending for the next five years
65% of contracted imports refer to platforms; 29% to systems and 6% to weapons
The mix is expected to remain unchanged
There is a pool $10bn in addressable opportunities for the 2014-20 period
At least 40% will be transformed to imports
Increased dependence on imports for the 2014-20 period but self-sufficiency in systems will increase after 2020, and platforms after the mid-20s
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2014 2015 2016 2017 2018 2019 2020$0.00
$500.00
$1,000.00
$1,500.00
$2,000.00
$2,500.00
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Weapons
Systems
PlatformsC
on
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Im
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& O
pp
or-
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)
2014 2015 2016 2017 2018 2019 2020$0.00
$500.00
$1,000.00
$1,500.00
$2,000.00
$2,500.00
$3,000.00
Weapons
Systems
Platforms
Co
ntr
acte
d I
mp
ort
s (M
)
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Russia – Imports and exports
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Imports• Achieved a period high of USD839
million in 2014, but are expected to dive in 2015 and 2016 due to domestic policy (import substitution, procurement regulations) and sanctions.
• However, bulk of 2014 and 2015 import figure based on Mistral LHD deliveries – future uncertain.
Exports• Reached a high of USD10 billion in
2014, and are expected to maintain a similar level in years ahead.
• Exports in 2014 driven by aircraft sales to China and India. Exports in 2015 are expected to be led by China.
2010 2011 2012 2013 2014 2015 2016
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Exports Imports
Case study: Russia : imports and exports 2010-2016
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Ukraine – Imports and exports
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Imports• Declining trend, reported to be USD113 million in
2014.
• Many imports based on Russian systems that are now unlikely to be delivered.
• Future imports are currently at a tipping point – the Ukrainian government is now more receptive to imports, but many countries hesitant to provide.
Exports• Down slightly in 2014 at USD628 million.
• Continue to be driven by land systems, with exports to Thailand and Iraq, as well as aircraft and hovercraft. India and Thailand expected to continue to lead as destinations in 2015.
• However, UkrOboronProm reportedly halted exports in second-half of 2014 to devote workers to state requirements.
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Exports Imports
Case study: Ukraine : imports and exports 2010-2016
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Defence Trade by Western Europe 2013-14
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Country Assessment
France
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France – Imports and exports
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Imports• Increase in 2014 to USD507 million as
modernisation of E-3F and E-2 airborne early warning platforms continues.
• Support systems for new platforms (e.g. Airbus A400M Atlas simulators) gathering pace.
• Delivery of new platforms to fill capability gaps began in 2014, notably with the MQ-9B Predator – low cost but providing significant new capability to the French military.
Exports• Third-largest exporter globally at USD4.9 billion.
Driven primarily by aircraft (incl. helicopters), followed by ships.
• Expectations for 2015 led by A330 MRTT deliveries to the Middle East, but don’t take into account more recent announcements – Egyptian Rafale and FREMM, deliveries of equipment to Lebanon, etc.
• Still some uncertainty over some major exports (Rafale to India and Gulf States, Mistral to Russia).
2010 2011 2012 2013 2014 2015 2016
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1,000
2,000
3,000
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6,000
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Exports Imports
Case study: France : imports and exports 2010-2016
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Defence Trade by Middle East 2013-14
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Country Assessment
Saudi Arabia
Qatar
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Case Study: Saudi Arabian Imports
Saudi Arabian imports have seen $1 billion in growth during 2014 and they are expected to grow further in the forthcoming years
Primary suppliers of military equipment is the US, UK, France and Germany.
2013’s multi-billion General Dynamics Land Systems contract for the Light Armoured Vehicle (LAV) will likely put Canada at the second position of exporters to the Kingdom.
Saudi Arabia has decisively increased its imports from 2011 and onwards by achieving double-digit budget increases for three consecutive years
Expectations of significantly lower oil revenues will increase uncertainty over military budget but reactionary cuts are unlikely.
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2015 2016 2017 2018 2019 2020$0.00
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
$12,000.00
$14,000.00
Addr Opps
Others
Germany
France
Canada
United Kingdom
United States
Contracted Imports & Addressable Opportunities ($M)
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Saudi Arabia Analysis
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Saudi Arabia Opportunities
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Qatar Analysis
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Qatar Opportunities
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Defence Trade by Sub-Saharan Africa 2013-14
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Leading Defence Exporting Companies 2014
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Global Defence Exports by Technology Type 2014
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Vehicle Exports by Company
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Vehicle Exports by Company (excluding General Dynamics)
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Key global opportunities over the coming decade
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Countries with rising addressable opportunity
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Declining Opportunity by Country over the coming decade
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Q&A Session
Next Intelligence Briefing: Major Program Opportunities within the FY16 US Defense BudgetThu 26th March - 15:00GMT / 11:00EDT
If you have any questions for the panellists, please use the Q&A or Chat windows on the right side of
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Ben Moores, Senior [email protected]
Georgios Salapasidis, Senior [email protected]
Charles Forester, Senior [email protected]