South Korea has once again secured its position among the world's top 10 defense exporters, with exports totaling approximately $14 billion in 2023. This marks the second consecutive year that South Korea has achieved this milestone, showcasing its growing influence in the global defense market. Anticipating continued demand, bolstered by substantial deals already in place, South Korea is poised for further expansion in the coming year.
Data from the Korean Ministry of National Defense and domestic defense companies reveal that South Korea expanded its export markets to 12 countries last year, including new partners such as the United Arab Emirates, Finland, and Norway. This diversification in export destinations, coupled with a doubling in the variety of weapon systems exported, highlights South Korea's commitment to broadening its presence in the international defense arena.
As part of its strategic vision, South Korea aims to rank among the top four global defense exporters by 2027, with ambitions to secure over a 5 percent share of the worldwide defense export market, a significant increase from the current 2.4 percent.
The key driver behind South Korea's defense export success has been several large-scale contracts, notably the $12.4 billion deal with Poland in 2022. This landmark agreement, forged in response to heightened defense needs following geopolitical events, underscores South Korea's capability to meet evolving security demands on the global stage. Recent deals, such as LIG Nex1's $3.2 billion agreement with Saudi Arabia for the M-SAM2 ballistic missile interceptor system, further solidify South Korea's position as a leading defense exporter.
Companies like Hanwha Aerospace, with the largest order backlog among global defense firms, are expecting significant growth in new orders. Hanwha Aerospace's order backlog has surged six-fold in the last two years, reflecting the strong demand for South Korea's defense products. Negotiations are underway for exporting various defense systems to countries like Romania and Poland, showcasing South Korea's competitiveness in the global defense market.
Additionally, Korea Aerospace Industries and Hyundai Rotem are poised to secure substantial orders, with discussions underway for aircraft exports to Egypt and European countries, as well as agreements for the export of K-2 tanks to Poland.
Despite these achievements, challenges remain for the South Korean government, particularly in enhancing the export finance support system. Improved export finance mechanisms, including export credit, insurance, and risk management, are essential to unlocking the full potential of South Korea's defense export capabilities and sustaining its growth trajectory in the global market.
The International Trade Council continues to monitor South Korea's defense export developments, recognizing the country's increasing role in shaping the global defense industry landscape.