Frost & Sullivan estimates that the rapidly developing economies of Brazil, Russia, India and China (BRIC), will reach their collective peak by 2050, overtaking current economic leaders to emerge as the world's richest nations. As their economies rebound, defence budgets and procurement will soar, offering enormous growth opportunities for diverse defence industries.
New analysis from Frost & Sullivan's "An Executive Analysis of the Defence Budget and Procurement in the BRIC Countries" finds that the BRIC countries accounted for 12.6% of the total global defence expenditure in 2008. Considerable market potential exists primarily because of the priority placed on force modernisation and because of the persistent threat of terrorist activities
BRIC countries account for a combined expenditure of nearly 13% to the global defence expenditure, with the United States contributing more than 40% and Europe with approximately 25%. This makes BRIC the second largest contributor in terms of defence budget allocations. With the economies of the four countries growing at a much faster pace, these countries hold huge market potential for defence equipments, especially Brazil and India.
All four countries have nuclear capability and are active in the area of space research. Moreover, the combined numbers of active and reserve troops in the BRIC countries matches the total number of troops in the rest of the world.
Majority of the defence equipment suppliers to the BRIC countries are public sector companies or government companies. This situation is slowly changing with more number of private and international industry participants getting active in contracts and deals.
"With massive numbers of troops to maintain, defence budget allocations are naturally high and expected to escalate faster than in the rest of the world," notes Frost & Sullivan Research Analyst Harish Balasubramanian. "Modernization and troop upgrades alone will involve mammoth budgets, making these four countries growth hot spots for defence industries."