Ukraine’s Import Market Overview
Between 2016 and 2020, Czech Republic with a 40.7% share, emerged as the biggest arms supplier to Ukraine, due to the sale of 200 second-hand modernized BMP-1 Infantry Fighting Vehicles (IFV), of which 30 were delivered by 2018. Ukraine also has an ongoing deal with Czech Republic for the acquisition of DANA M2 Howitzers. The US emerged as the second largest supplier to Ukraine, accounting for 26% of the Ukrainian market. During 2016–2020, the US supplied Ukraine with 210 second-hand FGM-148 Javelin anti-tank missiles, MK VI Patrol Boats, 33 units of second-hand M-1114 HMMWV Up-Armored APVs, and six units of second-hand TPQ-36 Firefinder artillery locating radars. Ukraine also acquired defense equipment from other sources such as Poland, France, and Turkey, which accounted for 19.5%, 7.3%, and 6.5% of the Ukrainian defense imports, respectively.
Ukraine’s Defense Market Size (2017 – 2026)
In 2021, Ukrainian defense expenditure was valued at $4.2 billion, compared to $2.6 billion in 2017. Between 2017 and 2021, Ukrainian defense expenditure increased at a CAGR of 12.93%. Ukraine’s gross defense expenditure is projected to increase rapidly over the forecast period, as the military needs greater funding for the ongoing conflict in the Donbass region, Black Sea, and Azov sea. The insurgency in the Donbass region and Black Sea by Russian armed forces has forced Ukraine to boost its overall defense preparedness and the country is expected to heavily invest in refurbishing and repairing its military equipment, much of which is in a state of disrepair.
Over the forecast period, Ukrainian defense expenditure is anticipated to grow from $4.3 billion in 2022 to $6.4 billion in 2026, registering a CAGR of 10.05%. Over the forecast period, Ukrainian cumulative spending on defense is anticipated to be $26.4 billion.
Initiatives taken by the Ukrainian Government
The Ukrainian government has introduced several initiatives to bolster the strength of Ukrainian armed forces. Some notable examples are the Navy Vision 2035 which has laid emphasis on strengthening maritime security. The Ukrainian government has divided this strategy into three phases 2019–2025, 2025–2030, and 2030–2035. Another noteworthy imitative is the Air Force Vision 2035 which lays emphasis on modernization of Ukraine’s air force fleet. The lockdown has affected the country’s economy severely and the nation’s defense sector has also been impacted negatively. In 2021, the country allocated $4.2 billion to defense, and its allocations for national defense are expected to increase from $4.3 billion in 2022 to $6.4 billion in 2025, reflecting a CAGR of 10.05%. The country is anticipated to allocate a cumulative expenditure of $26.4 billion over the forecast period.
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