Online, Student Articles — September 17, 2010 at 2:07 am

Great Recession Dents Arms Sales in 2009

By Richard Bodnar

Global arms sales slowed to $57.5 billion in 2009, a significant dropoff from 2008 levels and the lowest total since 2005, as reported in a Congressional Research Service report.

The United States led the global market for arms sales with a 39% share, with Russia in second providing 18% of the total value of arms transfer agreements worldwide. France was third, with a 12% share. The three largest suppliers made up 70% of the total supplier market. Both France and Russia saw significant gains in the value of their arms deals, as opposed to the United States who saw a significant dropoff from peak 2008 levels. China, a relatively minor player in arms supply, provided about 3% of total sales in 2009.

The decline in United States sales can partly be attributed to the fact that 2008 was a banner year, as the United States signed multiple high value arms agreements significantly curtailing purchasing country needs in 2009. Increased demand was significant from the Near East and Asian regions, despite the economic recession dampening overall demand with additional stress on state budgets.

On the demand side of the ledger, amongst developing nations, Brazil was the lead purchaser of arms, followed by Venezuela and then Saudi Arabia.  Collectively the three countries signed over $17 billion in arms agreements. India, historically a large purchaser of foreign arms, signed $2.4 billion in agreements in 2009.

Modernization and improvements of existing forces were major drivers of continued investment, as the New York Times reported.

Recent purchases by developing nations have involved a large buildup of surface-to-air missiles, a product that was less commonly purchased in the first half of this decade. Other weapons systems saw generally normal variance, though changes in suppliers indicate willingness among developing countries to individual weapons systems business as needed. Sales of ships, one the largest ticket items, have marginally slowed in the latter half of the decade, with only 19 ships transferred from 2006-2009 versus 24 ships transferred from 2002-2005.

Despite setbacks in 2009, United States defense industry suppliers have something to cheer as a recent $60 billion arms deal with Saudi Arabia provides significant financial security for the future.  Some have even suggested that the deal may end up being worth $90 billion. Boeing (BA), Lockheed Martin (LMT), General Dynamics (GD) and other stand to benefit substantially from the deal.

Image courtesy of the World News Network

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