Massive defence spending in the Asia-Pacific region is driving an "explosion" in the global arms trade, and Asian military budgets are likely to eclipse the United States' by 2021, a study by respected analysts IHS Jane's showed on Tuesday.
The global arms trade jumped by 30 percent to $73.5 billion between 2008-2012 in spite of the economic downturn, driven by surging exports from China and demand from countries like India, and is set to more than double by 2020, defence and security consultancy IHS Jane's said on Tuesday.
In particular, military spending in the Asia Pacific region will rise 35 percent to $501 billion in the next eight years, compared to a 28 percent fall in U.S. spending to $472 billion over the same period due to budget cuts in Washington as well as the U.S.'s planned withdrawal from Afghanistan, IHS Jane's said.
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"Budgets are shifting east and global arms trade is increasing competition. This is the biggest explosion in trade the world has ever seen," said Paul Burton, a senior manager at IHS Jane's whose study surveyed 34,000 defence acquisition programmes globally.
The United States remained the world's biggest exporter of weapons in 2012 with sales of $28.5 billion, up from $20.1 billion in 2008. Meanwhile, India was the world's biggest importer of arms in 2012, showing a giant leap of 70 percent since 2008, from $3.1 billion to $5.3 billion.
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The study also predicts that Israel will sell twice as many drones as the United States in 2014 and will become the biggest exporter of the unmanned aircraft by the end of this year. Israel was ranked sixth in the global league of arms exporters last year, with sales of $2.4 billion, a 74 percent rise on the $1.4 billion it sold in 2008. It traded predominantly with India.
"Israel is easily the most effective exporter in the world, despite the fact that many Islamic countries refuse to deal with them," said Ben Moores, a senior forecasting analyst at IHS Jane's. "It just keeps growing its market share."
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Guy Anderson, senior principal analyst at the defence consultancy, warned that the shift in spending threatens the dominance of U.S. and Western defence firms which are in danger of losing the technological edge they once enjoyed over their Asian and Middle Eastern counterparts.
"The global arms market is about to get very turbulent. We may already have reached 'peak defence' with the U.S. dominance of the global defence market under threat. The big Western defence companies have no option - export or shrink - but this could be sowing the seed of their own demise," he said.
The article was first published by Economy Watch.