Market Trends of NATO Defense Industry
Weapons and Ammunition Segment to Showcase Significant Growth During the Forecast Period
During the forecast period, the market for weapons and ammunition is expected to grow a lot. The need to maintain a sufficient inventory of ammunition with the militaries worldwide and the increasing demand for training ammunition are anticipated to have a positive impact on the NATO defense market. In addition, NATO forces have been involved in peacekeeping missions and counter-insurgency operations that require a continuous supply of ammunition to continue their operations.
Several NATO countries are focusing on augmenting their military firepower and defensive capabilities in the wake of the growing threats from other nations and the increasing deployment of NATO forces to fight insurgent groups in various countries around the world. Furthermore, rising procurement of small ammunition and growing expenditure on enhancing defense capabilities drive segment growth. For instance, in February 2022, Finland's government decided to supply weapons and ammunition to Ukraine due to the Russian invasion. The country supplied 1500 rocket launchers, 2500 assault rifles, 150,000 rounds of ammunition, and other defense equipment. Also, in September 2021, the United States Army signed a small arms contract worth USD 13 million with Winchester Ammunition for the development of manufacturing processes for the 7.62 mm cartridge at the company's Lake City Army Ammunition Plant.
The US is Expected to Dominate the Market During the Forecast Period
The United States will continue to dominate the market during the forecast period. With a defense budget of USD 801 billion in 2021, the United States was expected to be the world's largest defense spender. Increased defense spending and rising expenditures on advanced weapons and ammunition procurement drove market growth across the country. In the fiscal year 2023 defense budget, the US Department of Defense (DoD) has requested USD 24.7 billion for missiles and munitions. The US DoD requested USD 5.2 billion for conventional ammunition, which includes bullets, cartridges, mortars, explosives, and artillery projectiles used primarily by ground forces.
Because Russia invaded Ukraine, the US government decided to send USD 400 million worth of weapons and generators to Ukraine in November 2022. Also in February 2023, the US Army said it had given USD 522 million to Northrop Grumman Corporation and Global Military Products Inc. to make 155 mm artillery rounds for Ukraine. In addition, in January 2023, Federal Ammunition signed a USD 13.8 million contract with the US Army for the supply of 5.56 NATO Mk311 Frangible Ammunition. Thus, increased spending on advanced weapons and ammunition drives market growth in the United States during the forecast period.
