Future of the US Defense Industry

by Sameer Joshi or 01-May-2018

Being the largest defense spender in the world, with a budget of US$639.2 billion in 2018, the US is expected to sustain its superiority over other nations in the coming years.

The country’s defense expenditure will largely be driven by 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. Moreover, the country’s initiatives to deal with the turbulence in the Middle East that could pose a potential threat to the interests of the US are also expected to drive the expenditure over the forecast period. As a percentage of GDP, the country’s defense expenditure is expected to average 3.1% over the forecast period.

The capital expenditure is expected to average 37.5% during 2019 and 2023 and the share of revenue expenditure is expected to average 62.5% during the forecast period.

The US government is expected to direct a substantial part of its budget towards homeland security, which will be driven by measures to check terrorist attacks, secure the nation’s borders, enforce and administer immigration laws, safeguard cyberspace, and ensure disaster resilience. Over the forecast period, the country’s homeland security budget is projected to increase at a CAGR of 3.13%, to value US$84.2 billion by 2023. The country is further expected to invest in the procurement of surveillance equipment and cutters and patrol vessels.