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With a Military Budget That Now Represents 21% of Government Spending and 7.1% of GDP, Saudi Arabia Consolidates Itself as One of the World’s Largest Defense Spenders, Accelerating Its Strategy to Strengthen the Local Military Industry and Reduce Dependence on Imports.
Saudi Arabia has decided to open its wallet even more when it comes to defense. By 2025, the country will invest no less than US$ 78 billion in the military sector, an increase from US$ 75.8 billion in 2024. This represents 21% of the total government budget and 7.1% of Saudi GDP.
So what’s behind this increase? What does the Kingdom want with this heavy investment? Let’s understand better what’s going on.
The Continuous Growth of Military Investments
If there’s one thing that Saudi Arabia doesn’t do, it’s saving when it comes to defense. Since 1960, the country’s military spending has grown at an average of 4.5% per year. And this trend remains strong.
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With US$ 78 billion, the country remains in the top 5 of the world’s largest military spenders and continues to lead in the Arab world. The reason is clear: to strengthen national security and, in the process, reduce dependence on foreign imports in the sector. Historically, Saudi Arabia has always been one of the big purchasers of military equipment from other countries. But that is changing. Now, the idea is to invest this money in developing its own military industry.
The plan is not just to spend more, but to spend better. And, of course, to ensure that a good part of this investment stays within the country, generating jobs and strengthening the local sector.
Vision 2030: The End of Oil Dependence in Saudi Arabia?
Saudi Arabia has realized that it can’t rely solely on oil forever. Therefore, in 2016, the country launched the famous Vision 2030, an ambitious plan to diversify the economy. In the military sector, the strategy is bold: by 2030, half of defense spending needs to be internalized. In other words, half of everything the country spends on defense has to be produced domestically.
Saudi Arabia has already taken an important step in this direction. By the end of 2023, the national military industry was already producing 19.35% of what was necessary. But to reach the target of 50%, there is still a long way to go. Ahmad Al-Ohali, head of the General Authority for Military Industries (GAMI), has already stated that he believes this number could even exceed 50% by 2030. Now we’ll see if they can deliver on this promise.
The Saudi government does not want to do everything alone. On the contrary, they are pressuring foreign defense companies to open regional headquarters in the country.
They have also launched a platform called “Invest in Saudi Arabia,” which essentially functions as a catalog of opportunities for companies looking to enter the Saudi defense market.
Supply Chains and Investment Opportunities
Saudi Arabia is not only increasing spending, but also wants to attract investors to strengthen the military industry. Currently, the country has already identified 74 opportunities in the defense sector supply chain. Of these, 30 are priorities and represent about 80% of future spending.
Another interesting point is that the country aims to ensure that its military industry is sustainable and technologically advanced. The goal is simple: equipment is always ready, more efficient, and less dependent on foreign maintenance. If successful, Saudi Arabia could become one of the most modern military hubs in the world.
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