Advertisement

Global Sales Of Arms Rise To $592 Bn Despite Supply Chain Issues

The significant increase has been reported despite supply chain issues that have jeopardised critical component shipments, which are expected to worsen due to the ongoing Russia-Ukraine conflict

The 100 largest companies in the industry sold USD 592 billion in arms and military services in 2021. It represents a 1.9 per cent increase over the previous year, according to data released by the Stockholm International Peace Research Institute (SIPRI).

The increase in 2021 marked the seventh year in a row that global arms sales increased. The report also revealed that while the rate of growth increased in 2021, it remained below the four-year average, owing to the coronavirus pandemic.

The significant increase has been reported despite supply chain issues that have jeopardised critical component shipments, which are expected to worsen due to the ongoing Russia-Ukraine conflict.

The coronavirus impacted the year 2020 and the resulting global restrictions were severe. In 2021, many parts of the arms industry were still affected by pandemic-related disruptions in global supply chains, according to the SIPRI report. The disruptions caused global shipping delays and shortages of critical components.

“We might have expected even greater growth in arms sales in 2021 without persistent supply chain issues,” Lucie Béraud-Sudreau, director of the SIPRI Military Expenditure and Arms Production Programme said in a statement.

“Both large and small arms manufacturers reported that their sales had suffered this year. Some firms, including Airbus and General Dynamics, have also reported labour shortages.

After Russia-Ukraine War

Notably, Russia is a major supplier of raw materials used in the manufacture of weapons and the Ukraine conflict has exacerbated the supply chain challenges for arms manufacturers.

SIPRI Senior Researcher Dr Diego Lopes da Silva said in the report released on Monday that It takes time to increase output. If supply chain disruptions continue, some major arms producers may take several years to meet the new demand created by the Ukraine war.

The report emphasises how US companies have dominated the top 100 list despite declining sales. According to the report, the 40 US companies on the list will sell USD 299 billion in arms in 2021.

High inflation in the US economy in 2021 was partly to blame for the 0.8 per cent real-term decline. Since 2018, the top five companies in the Top 100 have all been based in the United States.

Dr Nan Tian, a Senior Researcher at SIPRI said, “In the coming years, we can probably expect the US government to take stronger action to limit mergers and acquisitions in the arms industry. The US Department of Defence is concerned that reduced industry competition will have an impact on procurement costs and product innovation.”

According to the report, the combined arms sales of the Top 100 companies in Asia and Oceania reached USD 136 billion in 2021, a 5.8 per cent increase over 2020.

Chinese companies experienced rapid growth in Asian arms sales, with the eight companies on the list totalling USD 109 billion in sales, a 6.3 per cent increase.

Meanwhile, Middle Eastern firms generated USD 15.0 billion in arms sales in 2021, representing a 6.5 per cent increase over the previous year. The Middle East region grew at the fastest rate of all regions represented in the top 100.


Tags assigned to this article:
weapons industry SIPRI report

Advertisement

Around The World