In 2020, when the global economy contracted over 3.1% due to the COVID-19 pandemic, global arms trade recorded an increase of 1.3%, as per latest data released by the Stockholm International Peace Research Institute (SIPRI) on Monday, December 6. The growth in arms trade, both domestic and international, reveals how governments worldwide chose to maintain or increase their spending on arms despite the economic hardships caused by the pandemic.
According to SIPRI, arms trade by the world’s top 100 companies in the sector touched USD 531 billion in 2020, making it the sixth consecutive year of growth since 2015.
According to Alexander Marksteiner, a researcher with SIPRI, the main reason for the growth in arms trade in spite of the global economic slump was “sustained government demand for military goods and services.” He also observed that some governments choose to spend more on the military in order to mitigate the impact of the pandemic.
The report notes that for companies involved in both civilian and military trade, while COVID-19 impacted their civilian sectors leading to a decline in its share in overall business, the military sector remained intact or even recorded a growth. For example, the world’s largest arms manufacturer Boeing’s civilian aircraft sector was badly affected by COVID-19. However, its arms trade sector recorded over 10% growth in 2020.
US companies dominate world arms trade
Among the top 100 arms trading companies, the majority belong to the US. As many as 41 companies in the global top 100 list for 2020 are from the US and control over 54% of all arms sales in the world. According to SIPRI, US companies sold weapons worth USD 285 billion to governments worldwide, including the US, and recorded a higher growth rate (1.9%) than most companies from other parts of the world. SIPRI records that the top five arms trade companies are all from the US. In 2020, the US economy contracted by 3.5%.
There were 26 European companies in the list of the top 100 arms manufacturers in 2020 with total arms sales worth USD 109 billion. Among these, the six companies from the UK with a net worth of USD 37.5 billion recorded the highest growth rate of over 6.2%. The overall economy of the UK contracted by 9.9% in 2020.
Chinese companies were a distant second in terms of share in global arms trade in 2020. They accounted for just over 13% of the total global trade, worth USD 66.8 billion.
French and Russian companies were the exception to the general positive growth in arms trade with a respective decline of 7.7% and 6.5% in comparison to 2019. Nine Russian companies in the top 100 list sold weapons worth USD 26.4 billion. Russian companies’ total share in the global arms trade came down to just 5%.
Among other countries, three Israeli companies in the top 100 list had a global share of 2%, more than the total share of the five Japanese companies on the list. The Israeli companies recorded total sales of over USD 10 billion.
India, whose economy contracted more than 7% in 2020, had three companies among the top 100 arms dealers in the world. These companies, thanks to increased purchasing by the Indian government, recorded more than 1.7% growth in their arms sales in comparison to 2019, with overall sales worth USD 6.5 billion.