The framework, announced by Saudi Arabia’s crown prince Mohammad bin Salman to bolster the kingdom’s defence sector with an investment of $50bn to $80bn is expected to drive defence expenditure at a compound annual growth rate (CAGR) of 2.1% from $51.9bn in 2023 to $56.5bn in 2027.
GlobalData’s latest report, ‘Saudi Arabia Defence Market Size and Trends, Budget Allocation, Regulations, Key Acquisitions, Competitive Landscape and Forecast, 2022-27’, reveals that Saudi Arabia’s defence acquisition and R&D spending growth recorded 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 defence spending in 2019, 2020, 2021, and again in 2022 due to significant erosion in global oil prices.
Akash Pratim Debbarma, Aerospace & Defence 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 defence industry, allowing it to create jobs locally and to build a robust defence 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.”