Geopolitical trends
Higher borders for emerging markets
Since the start of this decade, there has been a strong emphasis on internationalisation in the defence sector. This has involved emerging defence industries in Asia and Middle East asserting themselves as exporters and looking for growth overseas, while established defence industries in Europe and North America looked worldwide to offset flat or falling spending at home.
Jane’s forecasts that global defence spending growth will moderate to a level of around 2 percent per year over the next five years as budget increases in Europe and North America slow and emerging markets again become the key source of growth.
Nonetheless, there will be some obstacles to internationalisation of defence trade. Virtual trade borders are increasingly going up around the world as countries seek to ring-fence defence budgets and restrict foreign participation.
The European Union is an example of this, as it is centralising activity to the exclusion of non-EU participants while closely scrutinising foreign acquisitions of national security assets, and the US, which is taking a dimmer view of foreign entry.
China expanding its influence
China will continue to increase its naval presence and operations around the world to help protect global interests and supply routes back to China. This strategy also moves beyond South China Sea territory as China continues to offer loans and lease agreements to countries for access to ports and harbours around the world.
Closer bilateral and multi-lateral naval relationships between China and rival claimants to the South China Sea disputes are expected. This will take place against the backdrop of growing dependence on Chinese naval weapon manufacturers, and prevailing uncertainty over the US security commitment abroad.
China is also attempting to overtake advanced countries across a number of sectors. For example, China is overtaking Russia in most aspects of aerospace development with J-31 combat aircraft, space exploration, cheap unmanned air vehicles (UAVs) and carrier operations.
Aftermath of Brexit
Overall European defence spending is projected by Jane’s Defence Budgets to increase by 4.1 percent in 2019, largely driven by increases in Germany and France. This projection depends upon a stable UK defence budget, which itself depends upon the performance of the UK economy post-Brexit. If the UK leaves the EU with a deal, current UK defence spending plans are likely to be maintained. In the event of a disorderly Brexit, all projections will be downgraded and that will impact aerospace and defence company revenues.
Developing technologies
Artificial intelligence
Defence companies around the world will continue to focus on disruptive technologies and fourth industrial revolution technologies, such as artificial intelligence (AI).
AI is becoming prevalent across new naval technology — missiles, navigation, aircraft — and this trend is set to increase, with intelligence increasingly devolved from platforms and systems, and injected into weapons. The US, Russia and China are expected to lead the way.
Developments in AI in the defence domain also include research programs in the field of cognitive electronic warfare, navigation techniques for drone swarms, detection and signal processing in sensors, and dynamic spectrum allocation for radar/radio equipment in the congested radio frequency (RF) spectrum.
3D Printing
3D printing will increasingly focus on how parts can be made at lower cost, particularly in remote environments such as forward-deployed locations. As engineering improves either through component design or the way that powders and filaments are developed, it will be utilised as a point to reduce cost over traditional fabrication methods.
Unmanned Systems & Counter Unmanned Systems
Unmanned underwater vehicles (UUV) are finally coming into their own and pose genuinely disruptive potential as reconnaissance and weapon systems. With reports of Russia testing the Poseidon system (earlier named Status -6) in December 2018, a nuclear powered-nuclear armed UUV with theoretically unlimited range and endurance, the threat perception has become very real. This is going to have an impact on the present development of such weapons, as well as defences against them, likely starting a new weapons race.
There will be accelerating development of counter-unmanned air systems (C-UAS). Vehicle-mounted C-UAS is entering developmental tests and limited usage, which is likely to increase. The US Navy is also working on C-UAS for ships by using portable land-radar systems but eventually looking for a way to deploy Aegis-Directed Energy systems. Jane’s has identified some 110 C-UAS products, although many are immature and cover only one segment of the scan, acquire and defeat capability.
Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR)
The C4ISR domain is undergoing significant technological innovation and development. It is also beginning to increase its influence on the outcome of conflicts as more sophisticated systems are fielded. Some of the key trends to watch out for 2019 are as follows:
Multifunction RF systems
The systems, which consolidate several RF functions like radar, electronic support, electronic attack and datalink communications within a shared set of electronics and antenna apertures using active electronically scanned array (AESA) technology, are being developed. This gives significant advantage in terms of size, weight and power (SWaP), life-cycle cost reduction, adaptive resource allocation, interference suppression and electromagnetic compatibility (EMC). It also contributes to a platform’s radar cross-section (RCS) reduction and performance optimisation of the RF functions.
Cyber security
Cyber security concerns now impact procurement schedules and boost funding, particularly of commercial off-the-shelf (COTS) wireless technology. The need to upgrade crypto is also driving modification and replacement of the current inventory of military communication infrastructure worldwide.
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