Defense Export Market Dynamics of Russia

Russia’s defense export levels exhibited a declining trend from 2017 to 2021. The export value dropped from $6,238 million in 2017 to $2,743 million in 2021. 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. 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.