Wars and regional tensions boost arms sales

In 2023, the global arms industry experienced a significant recovery due to persistent conflicts in Ukraine and Gaza, as well as rising tensions in the Asia-Pacific region. These factors drove unprecedented demand for arms, leading to a marked increase in sales for major arms companies. 

According to a report by the Stockholm International Peace Research Institute (SIPRI), sales by the world's leading arms manufacturers experienced remarkable growth last year, with significant increases for producers in Russia and the Middle East. 

According to the report, total sales of arms and military services by the 100 largest companies in the sector reached 632 billion dollars last year, an increase of 4.2%. 

These figures fell in 2022 due to the inability of large global companies to meet the increase in demand. However, the report highlights that many of them managed to revive their production in 2023. 

Reflecting this remarkable increase in demand, the top 100 companies in the sector achieved revenues in excess of $1 billion individually for the first time last year. 

‘There was a significant increase in arms sales in 2023, and this trend is expected to continue in 2024,’ said Lorenzo Scarrazato, a researcher with the SIPRI programme on military spending and arms production, in a statement. 

He added that the sales of the world's top 100 groups ‘do not yet fully reflect the volume of demand’, stressing in this regard that ‘a large number of companies have started procurement campaigns, demonstrating their optimism about the future’. 

SIPRI noted that smaller producing companies have been more effective in meeting growing demand driven by the wars in Gaza and Ukraine, tensions in East Asia and rearmament programmes in other regions. 

‘Some of them specialise in specific components or in building systems that rely on a single supply chain, which allows these companies to respond more quickly,’ said Nan Tian, director of the military spending programme.  

US groups, the world's leading producers, experienced a 2.5% growth in sales in 2023. These companies still account for half of global arms revenues, with 41 US companies included in the top 100 list. 

In contrast, the world's two largest arms groups, Lockheed Martin (-1.6%) and RTX (formerly Raytheon Technologies, -1.3%), experienced a drop in sales. 

‘They often rely on complex, multi-lateral supply chains, which makes them vulnerable to logistical challenges that will still be present in 2023,’ Tian said. 

On the other hand, in Europe, which is home to 27 arms manufacturing groups, sales last year grew by only 0.2%. 

In the Old Continent, arms companies also recorded ‘a notable increase in revenues, supported by war-related demand in Ukraine’, especially for ammunition, artillery, air defences and ground systems, according to the SIPRI report. 

The Russian figures, while incomplete, show the effects of a deeply war-oriented economy. 

Arms sales of the two Russian groups on the list of top companies saw a significant increase of 40%, driven mainly by a 49% increase in sales by the Rostec group, according to the report. 

In the Middle East, arms companies saw an 18% increase in sales, driven by the war in Ukraine and the first months of the conflict between Israel and Hamas in the Gaza Strip, which erupted in October 2023 following the terrorist group's attack.  

The three Israeli companies included in the ranking achieved record revenues of 13.6 billion dollars, an increase of 15%. Meanwhile, sales of the three Turkish groups, such as drone manufacturer Baykar, grew by 24% against the backdrop of the war in Ukraine and Turkey's effort to strengthen its defences. 

In Asia, the generalised rearmament is particularly reflected in the 39% increase in sales of the four South Korean companies, 35% for the five Japanese companies and 35% for the nine Chinese companies, whose sales grew by only 0.7% due to the economic slowdown in a context of crisis.