07 Jun Saudi Vision 2030 will drive defense expenditure to $56.5bn in 2027, observes GlobalData
Vision 2030, the ambitious strategic framework outlined by Saudi Arabia’s crown prince Mohammad bin Salman, is expected to drive defense expenditure at a compound annual growth rate (CAGR) of 2.1% from $51.9bn in 2023 to $56.5bn in 2027. The data from GlobalData has been released in their latest report ‘Saudi Arabia Defense Market Size and Trends, Budget Allocation, Regulations, Key Acquisitions, Competitive Landscape and Forecast, 2022-27’.
Within the report, the data reveals that Saudi Arabia’s defense acquisition and R&D spending growth recorded a Y-o-Y decline of 2% from $13.1bn in 2021 to $12.8bn in 2022. Saudi Arabia is heavily reliant on oil revenues and was forced to reduce its defense spending in 2019, 2020, 2021, and again in 2022 due to significant erosion in global oil prices.
Akash Pratim Debbarma, Aerospace & Defense Analyst at GlobalData, said: “The Vision 2030 initiative is not only a strategic move to strengthen armed forces in terms of procuring foreign platforms and weapons but to also boosts Saudi’s indigenous defense industry, allowing it to create jobs locally and to build a robust defense industry.
“If executed properly, it has the ability to help the kingdom diversify from oil and support the growth required for its long-term goals.”
In line with the Vision 2030 initiative, Saudi Arabia is anticipated to spend around $12bn to procure 44 units of the THAAD system to augment its existing PAC-III units that presently focus on defending against Iran.
Debbarma added: “Saudi Arabia had deployed the PAC–III system to defend critical infrastructure and other high-security areas. However, with the introduction of longer-range Iranian missiles, there is a need to procure the THAAD to complement the Patriot systems and form a reliable anti-ballistic missile shield.
“Saudi Arabia will benefit from the recent bans on Russian oil by the EU, and a general increase in oil prices caused by the ongoing Russo–Ukrainian war. This will help Saudi Arabia to have more resources to fund its defense sector over the forecast period, making it easier for the country to stay in line with the Vision 2030.”