Russian Defense Market Report 2019: Attractiveness, Competitive Landscape and Forecast to 2024 - ResearchAndMarkets.com

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Russian Defense Market - Attractiveness, Competitive Landscape and Forecast to 2024 offers detailed analysis of the Russian defense market with market size forecasts covering the next five years. This report will also analyze factors that influence demand for the industry, key market trends, and challenges faced by industry participants.

After two consecutive years of decline in defense expenditure in the years 2017 and 2018, Russian defense spending recovered in 2019 and is valued at US$46.1 billion for 2019. The total allocation for 2019 marks the first surplus budget for the Russian Federation. The country, buoyed by the recent recovery in oil and gas prices, is anticipated to steadily increase its funding for the defense sector. Russia's defense expenditure is expected to register a CAGR of 5.46% over the forecast period to reach US$59.3 billion by 2024.

Russian defense modernization has traditionally been funded by booming oil and gas profits; however, the crash in the global energy market resulted in an erosion of the country's revenues and forced the country to adopt austerity measures to cut down on government expenditure during the historic period. As a consequence, Russian defense expenditure declined drastically from US$56.7 billion in 2016 to US$48.9 billion in 2017 and US$45.2 billion in 2018.

With the recovery in global energy prices, Russia's financial position has slowly started to improve, and the value of its Ruble has started to recover against the US dollar. Starting in 2019, Russian defense expenditure is anticipated to start reflecting a positive growth trend and increase from US$48 billion in 2020 to US$59.3 billion 2024, reflecting a CAGR of 5.46% 2020-2024. Russian defense capital expenditure is anticipated to witness concurrent growth, increasing from US$24.6 billion in 2020 to US$30.3 billion in 2024, reflecting a CAGR of 5.46%.

The capital expenditure allocation, which stood at an average of 47.4% during the historic period, is expected to increase to an average of 51% over the forecast period, primarily due to Russia's decision to build-up its forces in the Arctic, which is expected to drastically increase its funding to create infrastructure within the Arctic. The country is expected to focus on the modernization and procurement of C4ISR systems, transport aircraft, naval vessels, multirole aircraft, and conventional and nuclear submarines, among others. In November 2017, Russia unveiled its new modernized TU-160M2 Blackjack strategic bomber, which is scheduled to enter service by 2021.

Russian homeland security (HLS) expenditure stood at US$37.1 billion in 2018 and recorded a CAGR of -9.57% during the historic period. However, it is expected to record a CAGR of 5.22% over the forecast period to value US$45.8 billion in 2023. This expenditure is primarily driven by the need to protect the country from cyber threats and to strengthen its border protection.

Russian defense exports expected to increase over the forecast period. Aircraft accounted for 48.4% of Russia's total arms exports during 2013-2017, as a result of strong international demand for the country's Sukhoi and MiG fighter jets. Russian weapons and equipment are in high demand internationally, due to its affordability and performance standards.

India, China, Vietnam, Algeria and Egypt are among Russia's biggest defense export consumers but have reduced procurements over the last couple of years. As a result, the Russian government is now focusing on expanding its export market to countries in South America and Africa. Other major consumers of Russia's military goods include Azerbaijan, Iraq, and Venezuela, among others.

Scope

  • Russia's defense expenditure in 2019 values US$46.4 billion, recording a CAGR of -3.11% during the historic period, and is expected to cumulatively value US$268.4 billion over the forecast period. Russia, as the largest country in the world, spans across an area of 17.1 million km and therefore has the longest land border in the world. The country shares its land borders with 16 different countries, and also shares maritime borders with Japan, via the sea of Okhotsk, and the US state of Alaska, across the Bering Strait. The country remains deeply distrustful of the expansion of the NATO alliance and perceives it to intrude within its sphere of influence. The need to deter NATO is anticipated to fuel investments in the Russian defense sector and the country is expected to progressively increase defense spending.
  • During the historic period, the Russian government allocated an average of 47.4% of its total defense budget to capital expenditure and the remaining 52.6% to revenue expenditure. Capital expenditure is expected to increase over the forecast period to an average of 51%, owing to the Russian government's decision to speed up its defense modernization program under its new State Armaments Program (SAP) 2027.
  • The MoD is expected to mainly invest in Critical Infrastructure Protection (CIP), land based C4ISR, and airborne C4ISR capabilities.

Key Topics Covered:

1. Introduction

2. Executive Summary

3. Market Attractiveness and Emerging Opportunities

3.1. Current Market Scenario

3.1.1. Primary Threat Perception

3.1.2. Military Doctrine and Strategy

3.1.3. Procurement Programs

3.1.4. Top Procurement Programs by Value (US$ Million) over 2019-2024

3.1.5. Social, Political and Economic Environment and Support for Defense Projects

3.1.6. Political and Strategic Alliances

3.2. Defense Market Size Historical and Forecast

3.2.1. Russia's defense budget to grow at a CAGR of 5.46% to value US$59.3 billion by 2024

3.2.2. Military modernization and defense exports to drive defense expenditure over the forecast period

3.2.3. Defense expenditure as a percentage of GDP is expected to average 3.6% over the forecast period

3.3. Analysis of Defense Budget Allocation

3.3.1. The majority of Russia's defense budget is expected to be allocated to revenue expenditure

3.3.2. Capital expenditure is expected to record a CAGR of 5.33% over the forecast period

3.3.3. Status of critical projects in key sectors:

3.3.4. Per capita defense expenditure expected to increase over the forecast period

3.4. Homeland Security Market Size and Forecast

3.4.1. Russian homeland security expenditure forecast to reach US$39.4 billion by 2024

3.4.2. Border security and the fight against cyber-attacks are the main factors encouraging growth in the homeland security market

3.5. Benchmarking with Key Global Markets

3.5.1. Russia's defense budget is expected to grow significantly over the forecast period

3.5.2. Russia is among the world's largest defense spenders

3.5.3. Russia allocated 2.8% of its GDP to defense in 2019

3.6. Market Opportunities: Key Trends and Growth Stimulators

3.6.1. Top Defense Market Sectors by Value (US$ Million) - Projections over 2018-2023

3.6.2. Critical Infrastructure Protection (CIP) - Physical Security

3.6.3. Land-based C4ISR

3.6.4. Airborne C4ISR

4. Defense Procurement Market Dynamics

4.1. Import Market Dynamics

4.1.1. The country's defense imports are low owing to a developed indigenous sector

4.1.2. Ukraine was the key defense supplier to Russia

4.1.3. Aircraft and engines were the key defense imports during 2014-2018

4.2. Export Market Dynamics

4.2.1. Russia's exports witnessed an increasing trend during 2014-2018

4.2.2. India, China, and Algeria are Russia's main defense equipment purchasers

4.2.3. Aircraft and ships account for the majority of Russia's defense exports

5. Industry Dynamics

5.1. Five Forces Analysis

6. Market Entry Strategy

6.1. Market Regulation

6.1.1. Entry into the defense sector is highly regulated

6.2. Market Entry Route

6.2.1. Budgeting Process

6.2.2. Procurement Policy and Process

6.3. Key Challenges

6.3.1. Russian government's aversion to Western defense technology

6.3.2. Sanctions on Russian defense entities constrains market opportunities

7. Competitive Landscape and Strategic Insights

8. Business Environment and Country Risk

8.1. Economic Performance

8.1.1. GDP Per Capita, US$

8.1.2. GDP (Current US$ Billion)

8.1.3. Exports of Goods and Services (LCU Billion)

8.1.4. Imports of Goods and Services (LCU Billion)

8.1.5. Gross National Disposable Income (US$ Billion)

8.1.6. LCU per US$ (Period Average)

8.1.7. Market Capitalization of Listed Companies (US$ Billion)

8.1.8. Market Capitalization of Listed Companies (% of GDP)

8.1.9. Government Cash Surplus/Deficit as a Percentage of GDP (LCU)

8.1.10. Goods Exports as a Percentage of GDP

8.1.11. Goods Imports as a Percentage of GDP

8.1.12. Services Imports as a Percentage of GDP

8.1.13. Services Exports as a Percentage of GDP

8.1.14. Foreign Direct Investment, net (BoP, current US$ Billion)

8.1.15. Net Foreign Direct Investment as a Percentage of GDP

8.1.16. Mining, Manufacturing, and Utilities Output (LCU Billion)

Companies Mentioned

  • United Aircraft Corporation (UAC)
  • Sukhoi
  • Irkut Corporation
  • Rostec
  • Uralvagonzavod (UVZ)
  • Splav
  • KBP Instrument Design Bureau
  • V.A.Degtyarev Plant
  • Kalashnikov Concern
  • Oboronprom Corporation
  • United Engine Corporation (UEC)
  • Tactical Missiles Corporation,Almaz-Antey
  • Kurganmashzavod
  • United Shipbuilding Corporation (USC)

For more information about this report visit https://www.researchandmarkets.com/r/abn3kz

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Contacts

ResearchAndMarkets.com
Laura Wood, Senior Press Manager
press@researchandmarkets.com
For E.S.T Office Hours Call 1-917-300-0470
For U.S./CAN Toll Free Call 1-800-526-8630
For GMT Office Hours Call +353-1-416-8900