NATO Member Defense Growth Opportunities

The disruption the Russo-Ukrainian War is having on the international defense system has also sped up changes in the global defense industry. The war, the most influencing event on global defense markets in the last 2 decades, has caught NATO members in the midst of strategic national security and military build-up planning processes, especially in the face of China's potential threat.

Russia's invasion of Ukraine has catalyzed the EU to update its strategy urgently. Russian aggression is described by the Council of the EU in late February 2022 as "a tectonic change in the history of Europe,” from which a need arose to make a "quantum leap" in the development of military capabilities so as to act as an "assertive protective force,” recognizing the gap between military capability and the threat.

With vast global implications, war will directly affect the global defense market’s competitive landscape as well as the demands, needs, and long-term military build-up plans among NATO members. The increasing threat of Russian attribution is shifting European defense budgets and military posture. For the first time since WWII, Germany has allowed the export of offensive weapons and removed barriers for the procurement of armed UAVs.

It is too early to determine how the various reforms will transform the global defense market once the war has ended. But some significant areas stand out, considering that for the first time in decades Eastern and Western weapon systems and concepts of operations are engaged.

This report explores the initial trends impacting NATO members’ defense markets in light of the changing geopolitical landscape and emerging military doctrines responding to modern battlefield challenges. The research investigates future directions for NATO’s defense market, accounting for global perspectives and initial forecasts based on expanding national and multi-national defense budgets. Discussions include the prioritization of specific military domains, such as armed-tactical small and mini drones and their vast proliferation potential. Additionally, the report highlights NATO members’ estimated defense efforts in domains such as C4ISR, missile defense, and AI.

Other major focus areas of this research are the main platforms used by the Ukrainian Armed Forces and the harsh implications of the war on the Russian defense industry, as Russia is currently the second-largest arms exporter globally with more than $13 billion in 2021 revenue. Frost & Sullivan expects vast shifts in the defense industry’s competitive landscape post war and analyzes the initial implications of this influencing trend.
Frost & Sullivan based this report on primary and secondary research, including information from its internal databases. Principle industry analyst conducted interviews with leading defense thought leaders, government officials, and end users. Primary research accounts for 20% of the content.

Disclaimer: Long-term geo-strategic developments of the war and Russia's future moves will require further analysis to determine their implications on global defense trends.