The world's biggest defense companies saw their revenue rise to $374.8 billion (317 billion euros), a 1.9 percent increase year-on-year, the Swedish peace research institute (SIPRI) said in a new report published on Monday.
The ongoing North Korean military threat helped drive the surge, with arms sales by South Korean companies reaching $8.4 billion in 2016-a 21 percent increase from the year prior.
Sipri said growth in arms sales was triggered by "military operations in several countries and persistent regional tensions that are leading to an increased demand for weapons".
Sales of arms and military services world over increased by 38 percent since SIPRI started its analysis in 2002. Aude Fleurant, Director of SIPRI's Arms and Military Expenditure Programme said Lockheed Martin's significant growth in 2016 came from its acquisition of helicopter producer Sikorsky and high delivery volumes of the F-35 combat aircraft. Interestingly, Saudi Arabia, the fourth largest spender, is the largest client of American arms, accounting for 13 percent of arms sales by United States companies. Sales by USA companies grew by four percent past year, totaling more than $217 billion.
The sharp growth in arms sales reported by the American companies is attributed to United States military operations overseas and acquisitions of large weapon systems by other countries have driven this rise.
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The UK's decision to withdraw from the European Union did not seem to have an impact on the arms sales of British companies, which rose by 2.0 per cent in 2016. This is nearly 2 per cent (1.9) higher compared to 2015 data.
Germany registered an increase of 6.6 per cent in sale of weapons primarily on the account of sales of armoured vehicle producer Krauss-Maffei Wegmann and land systems producer Rheinmetall.
SIPRI also listed companies based in Brazil, India, South Korea, and Turkey as "emerging producers". It found that South Korea dominated the "emerging producers" category.
The decline in arms sales by Japanese firms has resulted in a 1.2 percent drop in combined weapons sales of "other established producers" based in Japan, Australia, Singapore, Israel, Poland and Ukraine. Japan's largest arms companies experienced sharp falls in 2016: Mitsubishi Heavy Industries' arms sales decreased by 4.8 per cent, while those of Kawasaki Heavy Industries and Mitsubishi Electric Corporation declined by 16.3 and 29.2 per cent respectively. Interestingly, there is no specific mention of China in the SIPRI report.