A two-year budget deal in the USA coupled with growing global instability could see defence revenues jump by 2.7% in 2016, breaking a five-year decline, according to forecasters at Deloitte.
The sombre security outlook is driving governments worldwide to beef up their militaries, with forecasters noting an increase in demand for munitions and light attack and surveillance aircraft from aerospace manufacturers.
The turnaround is driven partly by a $13 billion uptick in US military spending, with Congress approving more than $570 billion for the Department of Defense (DOD) for fiscal 2016.
The United Arab Emirates, Saudi Arabia, India, South Korea, Japan, India, China and Russia are also driving growth by investing in next-generation military equipment, according to Deloitte’s 2016 global aerospace and defence outlook, published this week.
America accounts for 34% of approximately $1.7 trillion in defence spending in 2014 – the most recent year for which there are accurate figures. Coming in second place is China ($216.4 billion), followed by Russia ($85.5 billion), Saudi Arabia ($80.8 billion), France ($62.3 billion) and UK ($60.5 billion).
US defence firms secured $46.6 billion in foreign military sales in fiscal 2015, up by 118% compared to fiscal 2010. This record level comes despite complaints of a sluggish government approvals process, which has some firms worried about missing out on major arms deals.
On the innovation front, DOD spending on research and development has declined 21.1% over the past five years, while independent research declined 26.5%, Deloitte reports. But a spending turnaround could see this trend reverse.
