Global arms sales are increasing, despite problems in supply chains

Despite disruptions to supply chains exacerbated by the pandemic, global arms sales continued to rise, according to a report released today.

The 100 largest arms companies sold heavy weapons and services worth $592 billion (€562 billion) in 2021, according to this report by the Stockholm International Peace Research Institute .

The increase after adjusting for currency fluctuations was 1.91% last year compared to 2020. Growth accelerated on an annual basis, but was lower than the average recorded in the four years before the outbreak of the new coronavirus pandemic, according to the text.

According to SIPRI data, US companies supplied by far the largest quantities of military equipment. The 40 US companies on the list, including those in the top five, accounted for 51% of the total sales of the top 100 companies.

Chinese companies follow in second place, having dramatically increased their share (18%), followed at some distance by those from the UK (6.8%), France (4.9%), and Germany (1.6%).

After a slight increase (+0.4%), Russian companies accounted for 3% of sales in the year before the Russian army invaded Ukraine. Although publications indicate that their production has accelerated due to the conflict, sanctions are making it difficult for them to procure semiconductors and other raw materials, SIPRI points out.

How and to what extent the war in Ukraine, which broke out on February 24, will affect global arms sales will not become clear until next year.

Supply chain problems and the war are exacerbating difficulties on the one hand, but on the other hand they are greatly increasing demand, SIPRI points out.

«The long-term impact of the pandemic is really starting to show up in arms companies,» said Nan Tian, a researcher at the Institute and one of the authors of the study. Obstacles such as labor and raw material shortages have «slowed down» the ability of companies in the sector «to produce and deliver equipment systems on time,» he explained.

The problems will intensify, mainly because «Russia is a major supplier of raw materials used in weapons production,» according to the authors, at a time when war is increasing demand.

Although American companies continue to dominate the global arms market, accounting for more than half of global sales (or $299 billion), the US was the only country in the world whose companies saw a decline in sales compared to 2020.

Among the five largest companies in the market (Lockheed Martin, Raytheon, Boeing, Northrop Grumman, General Dynamics), only Raytheon recorded an increase in sales.

On the contrary, sales of the eight largest Chinese companies in the sector increased by 6.31% in 2021, to $109 billion.

European companies—27 of the 100 largest on the list—had a turnover of $123 billion, an increase of 4.21% compared to 2020.

The report also highlights the trend of private investment companies buying military equipment companies, a development that, according to the authors, has become much more visible in the last three to four years.

According to SIPRI, this trend raises the risk that the arms industry will become much more opaque and much more difficult to study.