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Saudi Arabian Defence Market Examined in New Report

Research And Markets : 08 July, 2010  (New Product)
Research and Markets releases its 3rd Quarter Saudi Arabia Defence and Security Report
Research and Markets has announced the addition of the 'Saudi Arabia Defence and Security Report Q3 2010' report to their offering.

Business Monitor International's Saudi Arabia Defence and Security Report provides industry professionals and strategists, corporate analysts, defence and security associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Saudi Arabia's defence and security industry.

Politically, there are long-term threats to the Kingdom which, given its wealth, is something of an indictment of the political system. Unemployment, the lack of democratic freedoms, entrenched inequalities in society, human rights abuses and foreign policy tensions are key vulnerabilities for the regime. However, the political system has the strength to remain in place as long as the royal family has the financial resources provided by oil revenues and the Western support to sustain it. The loss of either one of these could lead to substantial unrest and, potentially, regime change over the long term. Also, the emergence of a genuinely reformist leader with strong support among the public and the royal family, unlikely in the short-to-medium term, could bring about significant change. As it stands, oil prices are likely to remain high and Western support is set to continue, allowing the government to maintain its hold on power, with possible small-scale reforms, depending on the whims of the incumbent.

The greatest security issue currently facing Saudi Arabia (and also causing repercussions throughout the region) is the violent border incursions by Houthi rebels from the north of Yemen as they battle with Yemeni government forces. With such a threat to its security should the Yemeni government become too weak to deal with its internal disturbances, Saudi Arabia is likely to provide the Sunni government of Yemen with significant military and economic assistance over the coming years to counter the dual threats of the Shia (Houthi) uprising and an increasingly vocal al-Qaeda presence. Saudi Arabia also has its own domestic terrorism threats, as evidenced by last year's attack on Prince Mohammed bin Nayef by a suicide bomber.

The defence market in Saudi Arabia is expected to continue growing, especially with the rising economy. Defence spending was US$36bn (GBP22bn) in 2008, representing 7.7% of GDP. (Source: BAE Systems, Annual Report, 2009)

A contract for the import and assembly within Saudi Arabia of 72 Eurofighter Typhoon aircraft was signed in 2007, the first Typhoons being delivered last year. As well, in 2009, a three-year contract the Salam Support Solution was signed with BAE Systems for full-availability support for the Typhoons (Source: BAE Systems, Annual Report, 2009.)

Saudi Arabia is expected to consolidate the positive economic trends already underway last year. Growth will continue, driven mainly by the government, with private sector activity still subdued. The economy avoided outright recession in 2009, growing by 0.15%. Given the estimated 12.3% decline in oil export volumes, this is an impressive result. It reflects the continuing structural strength in the Saudi economy, which is largely due to resilient domestic demand, as well as government spending.

Higher oil prices in 2010 will allow the government to improve its fiscal position, allowing it to pursue expansionary spending and to maintain political stability, especially by providing both jobs and unemployment benefits.
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