"Defense Budget Increased by Over 2600 Trillion Won in 10 Years... Era of Defense Industry Gold Rush"

A report has been released emphasizing the need for an active global defense market entry strategy to secure a leading position in the era of a global defense industry gold rush due to the prolonged Russia-Ukraine war.

On the 27th, the Korea Institute for Industrial Economics and Trade stated in its report titled “Changes and Implications in the Global Defense Market After the Ukraine War” that over the next decade (2023?2032), the global defense budget is expected to increase by $2 trillion (2,600 trillion KRW) compared to previous forecasts, and the weapons acquisition budget is projected to rise by more than $600 billion (780 trillion KRW). From Eastern and Northern Europe adjacent to Ukraine to North America, Asia-Pacific, and the Middle East, countries worldwide are competing to increase their defense budgets.

The prolonged Russia-Ukraine war has also caused a sharp surge in weapons demand. However, only a handful of countries, including South Korea, can meet the high performance and quality, reasonable pricing, rapid delivery capability, stable logistics support, as well as technology transfer and industrial cooperation (offset trade) demanded by weapon purchasing countries. The United States is struggling with shortages of ammunition and missile stockpiles. Major weapon-exporting countries such as Germany, the United Kingdom, France, and Italy are unable to fully meet the demands of existing buyers due to the need to replenish their own military capabilities following weapon support to Ukraine.

The report diagnoses that this situation offers a once-in-a-lifetime opportunity for emerging weapon-exporting countries like South Korea and T?rkiye to expand their global defense export markets. It also anticipates that the friendly competition among major weapon-exporting countries to secure a leading position in the upcoming “global defense industry gold rush era” will intensify over the coming years.

South Korea, which recorded its highest-ever defense exports (based on orders) of $17.3 billion last year, has emerged as the most notable weapon-exporting country in the global defense market following the Russia-Ukraine war. This year, South Korea has already achieved export orders for weapons such as the FA-50 light attack aircraft (Malaysia, 1.2 trillion KRW), K-2 tank engines (T?rkiye, 300 billion KRW), ammunition, and rifles. Furthermore, it is striving to surpass last year’s record through second and third phase contracts (worth $30?35 billion) with Poland for K-2 tanks, K-9 self-propelled howitzers, and Chunmoo multiple rocket launchers.

Jang Won-jun, a research fellow at the Growth Engine Industry Research Division of the Korea Institute for Industrial Economics and Trade, stated, “To achieve the goal of entering the top four global defense exporters by 2027, a more challenging and proactive market entry strategy is necessary to maximize the benefits of the upcoming ‘global defense gold rush era’ over the next few years.” He added, “We must strengthen our global status as the ‘arsenal of liberal democracy’ by expanding regional defense export hub countries, discovering new key export products, targeting niche markets, enhancing defense supply chain cooperation with allied countries and establishing early risk response systems, preparing support measures for export offset trade, and reinforcing a control tower at the level of advanced countries.”