INDUSTRY REPORT
Image: @ Rory Arnold / BAE Systems.
Image: @ Lockheed Martin.
MH-60R“ Romeo” helicopter for the United States Navy. 700X Naval Air Squadron on board the UK’ s HMS Prince of Wales flying the Malloy Drone.
Global defence markets
According to analyst Research and Markets, the defence market size has grown strongly in recent years.
“ It will grow from US $ 506.9- | billion in 2025 to US $ 542.72 billion in 2026 at a compound annual growth rate( CAGR) of 7.1 %. Growth in the historic period can be attributed to rising geopolitical tensions driving increased procurement of air-, sea- and land-based defence equipment, the expansion of military modernisation programmes across major nations and growth in demand for auxiliary systems( such as radar, sonar and satellites). It can also be attributed to increased investment in maintenance repair and overhaul( MRO) for existing defence platforms, technological advancements improving performance and the integration of multi-domain defence systems,” said the analyst in its report.
It expects the defence market to undergo strong growth over the next few years, to US $ 739.43 billion in 2030 at a compound annual growth rate( CAGR) of 8 %.
“ The growth in the forecast period can be attributed to the anticipated rise in defence spending supporting nextgeneration platform development, the growing adoption of autonomous and unmanned defence systems across all domains and advancements in spacebased defence capabilities including military satellites. It can also be attributed to the increasing focus on integrated command-and-control and network-centric warfare systems and the expansion of defence MRO and support services driven by larger and older global fleets,” it added.
Opportunities and challenges
Rising defence expenditures are projected to drive growth of the defence market in coming years.
“ Asia-Pacific was the largest region in the defence market in 2025. Western Europe is expected to be the fastest growing region in the forecast period,” continued analyst, Research and Markets, cautioning that the market outlook is also being affected by rapid changes in trade relations and tariffs globally.
“ Tariffs are reshaping the defence market by increasing procurement costs for aircraft components, naval systems, armoured vehicles and electronic subsystems, impacting both production timelines and supply chain stability. Air-based
Manufacturers are responding to increased programme activity and export demand by strengthening production capability, modernising facilities and investing in advanced manufacturing technologies
Astute class submarine for UK Royal Navy.
Image: @ BAE Systems. and land-based equipment segments are most affected, along with regions heavily dependent upon cross-border sourcing such as Asia-Pacific and Europe,” outlined the analyst.
Resilience remains a defining theme. The experiences of recent years have reinforced the importance of secure supply chains, domestic sourcing and strategic partnerships. Organisations are reducing reliance on fragile global networks and strengthening local supply ecosystems to ensure continuity of production and compliance with security requirements. Aerospace and defence OEMs are looking for suppliers who can diversify sourcing, manage inventory strategically and ensure continuity, even in the face of global disruptions.
“ Workforce capability remains central to sector performance. Demand for systems engineers, manufacturing engineers, quality specialists and programme managers continues to outpace supply, while skilled technicians remain critical to maintaining
Image: @ BAE Systems.
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