The revenue of the world’s major arms suppliers they recorded a decrease in 2022due to problems in production that prevented companies from meeting the increase in demand, which was recorded mainly due to the war in Ukraine, according to a study released today by SIPRI.

According to this text by the Stockholm-based International Peace Research Institute, sales of arms and military services by the world’s 100 largest arms companies amounted to $597 million (€549 million) in 2022, a decrease of 3 .5% compared to 2021.

Meanwhile, geopolitical tensions and Russia’s invasion of Ukraine continued to fuel global demand for weapons and military equipment.

Against this backdrop, the drop in revenue was “unexpected”, SIPRI researcher Diego López da Silva told AFP.

“What this decline actually shows is the mismatch” of the surge “in demand” caused by the war in Ukraine “with the ability of businesses to increase production to respond,” Mr. López da Silva explained.

According to the institute, this situation is largely explained by the decline in revenues of major US arms manufacturers, as they were faced with “supply chain problems and labor shortages” mainly due to the novel coronavirus pandemic.

The US alone recorded a 7.9% decline in arms sales in 2022 but still accounted for 51% of global arms sales this year, with 42 US firms among the top 100 sellers in the world.

Vulnerable

US arms manufacturers are particularly exposed to supply chain hurdles, as the weapons systems they produce are often more complex than those produced by companies in other countries.

This means that “the supply chain is also more complex and involves more steps, which makes it more vulnerable,” explains Mr. López da Silva.

Russian arms makers also saw their revenues drop sharply, falling 12% to $20.8 billion, according to SIPRI.

This decrease is partly due to the international sanctions imposed on Russia and partly possibly to late payments by the Russian state, according to the institute’s analyst.

Moreover, the transparency of Russian arms manufacturers has decreased dramatically, and only two Russian companies were included in the top 100 list, “due to the lack of available data”, notes SIPRI.

In other areas of the world, where the military equipment produced is less complex, manufacturing companies have been able to meet the demand, for example in the Middle East and the Asia-Pacific region.

It was the Middle East where the increase was the greatest: it reached 11%, with revenues reaching $17.9 billion.

Sales were disappointing, especially for Turkish companies: Baykar, a maker of drones used in particular in Ukraine, recorded a 94% increase in revenue.

Military spending

The combined turnover of arms suppliers from Asia and Oceania grew by 3.1%, reaching $134 billion in 2022.

China, one of the world’s top arms exporters, saw eight of its top 100 companies increase their cumulative revenue by 2.7 percent to $108 billion.

As for the future, Mr. López da Silva sees no sign of demand slowing.

“Companies’ orders and order books are getting bigger,” he explains.

Moreover, European countries pledged to increase their military spending after Russia’s invasion of Ukraine, with some of the targets extending to 2030.

“This demand will continue in the coming years. We expect that as long as military spending continues to rise, so will the revenue” of the arms-producing industries, discount the SIPRI researcher.