Russia’s Defense Export
Russia’s defense export levels exhibited a declining trend from 2017 to 2021. The initial level was $6,238 million in 2017, before growing to $7,099 million in 2018. From then, a gradual decline took place, until a low of $2,743 million was reached in 2021. The greatest change in growth rate took place between 2019 and 2020 when there was a decrease of -22.1% and -33.3% respectively. Although the rate of decline stabilized in 2021, it nevertheless declined by -25.6%.
Large Export Deals
Although export levels have fallen, they remain substantial. Russia continues to make large export deals such as the $965 million contract to upgrade 26 Indian Mig-29 to the MiG-29UPG standard. India has also signed a contract with Russia for the procurement of an S-400 air defense system worth $5.43 billion. The decrease may in part be due to the EU trade embargo placed on Russia after the 2014 invasion of Crimea, which soured relations with the region and led to the decreased involvement of European players in the Russian defense market.
Aircraft: The Largest Domain
Aircraft continues to be the largest domain to be exported from Russia to major international recipients, such as India and China. Russia’s well-developed and successful domestic defense market has enabled Russia to maintain a large customer base for its exports, providing high-tech and innovative products that trade competitively against those of other large manufacturers such as the US and Germany. However, with the 2022 invasion of Ukraine, Russia has been embargoed by more stringent sanctions and has been cut off from the SWIFT payments system. The lack of a viable payment instrument coupled with the prospect of CAATSA sanctions is likely to deter prospective customers of Russian defense equipment, as demonstrated by the cancellation of SU-35 aircraft deals by Algeria, Egypt, and Indonesia. As such the Russian defense exports are likely to continue a secular declining trend over the forecast period.
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