Despite Budget Cuts, the US Base Defense Budget is Expected to Grow

The US dominates the world defense sector, with a budget of US$607.5 billion in 2014, and is expected to sustain its superiority over other nations in the coming years, according to the new report – Future of the US Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2019.

Despite the budget cuts, the US base defense budget is expected to grow at a CAGR of 1.75%, pushing the overall budget to increase at a CAGR of 1.64%. The country’s efforts to retain its military supremacy and initiatives to replace the aged and worn-out weapons that have been used in the Iraq and Afghanistan wars will stimulate the defense expenditure.

This report provides in depth analysis of the US defense market, with identification of market drivers augmenting its provision of data on the current industry size and growth expectations to 2019. Together with its investigation of the industry structure and procurement dynamics, with analysis of the competitive landscape of the Bangladeshi defense industry, and its assessment of the business environment, Future of the US Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2019 should be considered required reading for those serious about capitalizing on the significant opportunities it holds.

Key insights include:

  • The US has a defense budget of US$607.5 billion (including allocation for OCO) in 2014 and the government is expected to sustain a high level of expenditure over the forecast period. Although the allocation for overseas operations is estimated to remain stable at US$37.3 billion over the forecast period, the country is expected to increase its base military expenditure at a CAGR of 1.75%.
  • The expenditure will be triggered by the government’s plan to acquire advanced defense equipment coupled with replacement of old and obsolete arms and ammunitions. The looming threat of budget cuts and sequestration is not expected to terminate or affect the existing contracts, but will impact DoD’s future contracts and the number of military hardware to be procured under these contracts.
  • Significant opportunities are expected to exist in the fields of C4ISR, aircraft, cyber security, missile defense systems and submarines. Foreign defense companies and new entrants have the option to cater to the US defense market via joint development programs, strategic alliances, or acquisition of domestic players. The US government’s encouragement of foreign direct investment (FDI) in the defense sector will also help foreign companies in entering the market.

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Source: ASDReports - Market Research
Date: Mar 4, 2014