Heightened geopolitical tensions in the Middle East are creating strong demand for military equipment, which is expected to be one of the key drivers of defense-sector growth in the U.S. and elsewhere in the near term, according to a report issued by U.S.-based Deloitte Consulting.
“Though the pace of growth in defense spending by the two key countries in terms of…expenditure in the region—the UAE and Saudi Arabia—has slowed, their defense [outlay] is significant, and the region is expected to see mid-single-digit growth annually over the next decade,” the report said.
Deloitte said seven out of the top 10 countries with the highest military expenditure as a percentage of GDP worldwide are in the Middle East: Oman, Saudi Arabia, Kuwait, Jordan, Israel, Lebanon, and Bahrain. To reflect the focus placed on security by Middle East nations, some 40 percent of exhibitors at the Dubai Airshow (Chalet 48) are expected to represent military companies, the organizers of the event said, as was the case in 2017. Saudi Arabia will be a major presence.
Saudi Arabian Military Industries (SAMI) have announced its intention to attend this year’s show, along with the General Authority of Civil Aviation (GACA), which appointed new president Abdulhadi Al Mansouri May 8. Other Saudi companies expected to attend include GDC Middle East, Advanced Electronics Company (AEC), Middle East Propulsion Company (MEPC), Saudi Aerospace Company (SAC), and MRO specialists Saudia Aerospace and Engineering Industries (SAEI).
“SAMI develops and supports military industries in Saudi Arabia and plays a major role in localizing the military industries in the Kingdom, which is ranked in the top five countries in terms of military expenditures worldwide,” the company said. “This position will provide special tremendous investment opportunities.”
A new Saudi Airshow took place in Riyadh in March, giving local aviation a shot in the arm. “Aviation is a key pillar in the diversification and expansion of the Saudi economy within its 2030 Vision”, said Michele van Akelijen, managing director of show organizers Tarsus F&E Middle East. “The Dubai Airshow is the ideal platform for Saudi companies to present themselves to the global aerospace industry.”
Another attendee, the UAE’s Emirates Defence Industries Company (EDIC), is a platform providing national defense manufacturing and services from aircraft maintenance to military vehicles. It sees its mandate as attracting UAE nationals into technical careers, after its creation as a national defense industry champion comprised of 16 local defense concerns in 2014.
At the Dubai Airshow 2017, the UAE Ministry of Defense spent more than $4 billion on new products, services, and technologies from a range of companies that were exhibiting at the event, according to show organizers. “The great thing about the Dubai Airshow is that people come there prepared to do business,” said Major General Abdullah Al Hashmi of the UAE’s Ministry of Defence.
Citing Boeing’s 2018-2037 Current Market Outlook, Deloitte said Middle East passenger traffic is forecast to grow at 5.2 percent, creating demand for 2,990 new aircraft valued at around $660 billion. “In the Middle East, widebody aircraft are likely to comprise more than 40 percent of the total aircraft demand over the next two decades, as the region primarily accounts for high-volume, ultra-long-haul flights,” it said.
The Dubai Airshow is expecting around 165 aircraft on the static display and will host 1,200 exhibitors and 87,000 trade visitors from around the world at the Dubai Airshow site, Dubai South, November 17-21.