Wars, regional tensions boost sales for major arms suppliers

Sales by major arms suppliers were boosted last year by the wars in Ukraine and Gaza and tensions in Asia, with marked increases for manufacturers based in Russia and the Middle East, according to a report published Monday.

Sales of arms and military services by the world's 100 largest arms companies totaled $632 billion last year, up 4.2%, the Stockholm International Peace Research Institute (SIPRI) said.

They had declined in 2022 due to the inability of these global giants to meet the increase in demand, but many of them managed to restart their production in 2023, according to the report.

As a sign of this strong surge in demand, these 100 companies, for the first time, all individually achieved a turnover of more than a billion dollars last year.

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"There has been a marked increase in arms sales in 2023, and this trend is expected to continue in 2024," Lorenzo Scarazzato, a researcher at SIPRI's program on military expenditure and arms production, was quoted as saying in a statement.

Sales of the world's top 100 groups "do not yet fully reflect the scale of demand and many companies have launched recruitment campaigns, showing their optimism for the future," he adds.

Smaller producers have been more efficient in meeting this new demand linked to the wars in Gaza and Ukraine, growing tensions in East Asia and rearmament programs in other regions, SIPRI points out.

"Many of them specialize in one component or build systems that require a single supply chain," allowing them to react more quickly, Nan Tian, director of the military spending program, told AFP.

As the world's leading producers, American groups recorded a 2.5% increase in their sales in 2023 and still represent half of global arms revenues, with 41 American companies among the top 100 in the world.

Lockheed Martin and RTX (formerly Raytheon Technologies), the two largest arms groups in the world, recorded a drop in their sales.

“They often rely on complex, multi-tiered supply chains, making them vulnerable to the supply chain challenges that have persisted into 2023,” Nan Tian says.

Bond of Russian Rostec

Europe, with 27 groups, only posted a 0.2% increase in sales last year, which masks a dual reality.

European groups manufacturing complex weapons systems were still working on old contracts last year, which does not reflect the influx of orders recorded since then.

Other groups, on the other hand, "saw their turnover increase substantially, driven by demand linked to the war in Ukraine", notably for munitions, artillery and air defense systems and land systems, writes SIPRI.

The figures for Russia, although incomplete, show the effects of an economy largely geared toward war.

Sales of the two Russian groups in the ranking showed a 40% increase, mainly due to the 49% increase in sales of the state conglomerate Rostec, according to SIPRI.

Manufacturers in the Middle East were buoyed by the war in Ukraine and the first months of the Israeli offensive on Gaza in October 2023.

The three Israeli manufacturers in the ranking posted record sales of $13.6 billion, while the three groups based in Turkey, such as drone producer Baykar, saw their sales jump by 24%, supported by the war in Ukraine and Turkey's desire to develop its defense.

The general rearmament in Asia is particularly evident in the sales increases of the four South Korean manufacturers and the five Japanese weapons’ makers, with the nine Chinese producers marking time against a backdrop of a "slow economy.”