Global arms sales fall despite Ukraine conflict
Artillery shells were produced at the Scranton factory, Pennsylvania, USA, on April 12. Photo: AFP

The need to buy weapons around the world continues to increase, but the revenue of defense corporations in 2022 will decrease due to limited production capacity.

A report released today by the Stockholm Peace Research Institute (SIPRI) shows that the world’s top 100 defense companies earned a total of $597 billion in arms sales and related services in 2022, a decrease of 3.5% compared to last year.

The statistics were released in the context of global geopolitical tensions and the Russia-Ukraine conflict continuing to drive demand for military equipment procurement around the world.

“The decline in revenue is an unexpected move. It shows that defense companies did not have time to expand production lines to meet the recent surge in demand,” said Diego Lopes da Silva, senior researcher at SIPRI.

According to the report, this situation stems mainly from falling revenues of key weapons manufacturers in the US, which are struggling to overcome labor shortages and many supply chain constraints, which have started to arise since the COVID-19 pandemic was still raging.

Sales of US arms corporations decreased by 7.9% but still accounted for 51% of total revenue from arms sales globally in 2022, with 42 manufacturers among the 100 largest defense enterprises in the world.

“US defense corporations are especially vulnerable to supply chain disruptions because their weapons systems are complex and require many components from various sources. Any disruption seriously impacts this supply chain,” Lopes da Silva said.

Russian arms manufacturers also lost about 12% of their revenue compared to the previous year, down to 20.8 billion USD. SIPRI experts say the cause is Western sanctions against Moscow, and the Russian government has not paid many orders.

“The Russian defense industry also limited information disclosure, with only two companies included in the list of 100 due to lack of statistical data,” the SIPRI report said.

In contrast, defense enterprises in the Middle East and Asia-Pacific have been able to meet soaring demand by focusing on manufacturing less complex weapons.

The highest increase was recorded in the Middle East when arms corporations here earned 17.9 billion USD, an increase of 11% compared to last year. Turkish companies, including unmanned aerial vehicle (UAV) maker Baykar, recorded sales growth of up to 94%.

Revenue of arms manufacturers in Asia-Pacific also increased by 3.1% to 134 billion USD. China is the world’s second-largest arms supplier, owning 8 enterprises in the group of 100 and achieving an increase of 2.7% to 108 billion USD.

Expert Lopes da Silva said that there are no signs that global demand for weapons will decline in the near future. “The number of orders, as well as equipment being produced and waiting for delivery, has increased very sharply,” he said.

Many European countries also committed to increasing military spending to respond to the Russia-Ukraine conflict, of which some countries have built defense budgets until 2030. “Demand will increase continuously in the coming years. We forecast that the defense budget and revenue from arms sales will continue to increase,” Lopes da Silva said.