Boston, MA -- (SBWIRE) -- 09/30/2013 -- We expect the UAE's defence spending to increase to AED152.8bn in 2017; t. It will take defence spending per capita to AED17,632.

Notably, at a time when defence budgets in developed states are under pressure from fiscal constraints, we expect the share of national gross domestic product (GDP) accounted by the UAE's defence sector to continue climbing. It has risen from 5.1% in 2008, to stand at 5.6% in 2012. This is forecast to rise to 6.8% by the end of our 2017 forecast period.

The push to establish itself as a key regional defence hub and the ongoing modernisation of defence equipment, as the country seeks to enhance its technological capabilities, will be major drivers of defence expenditure growth. However, the country's ability to support this growth will be predicated on greater state investment and this will be informed by a robust economic growth outlook over our forecast period; we are forecasting average annual real GDP growth of 3.7% to 2017.

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BMI's UAE Defence & Security Report examines the country's strategic position in the Middle East and the wider world. It provides an overview of the contemporary geopolitical challenges facing the country, and the challenges it may face in the future, especially in the context of tensions with Iran and of the Arab Spring.

In addition, the report examines the trends occurring in the country's current and future defence procurement, and the order of battle across its armed forces. The general conclusion is that the UAE will continue to invest heavily in defence procurement, spending more than all the other countries in the Gulf Cooperation Council with the exception of Saudi Arabia and so giving itself a capability edge over many of its neighbours in spite of the relatively modest size of its armed forces.

In particular, the UAE and its Gulf Cooperation Council (GCC) partners must decide whether they wish to proceed with a US-led initiative that would integrate their individual missile defence systems to form a regional missile shield. These countries all field US-built systems that are interoperable and a larger network of systems would provide better protection against incoming threats. However, the GCC has never undertaken such far-reaching defence co-operation in the past, and it may be reluctant to do so now, even in light of the threat posed by Iran.

Tensions with Iran remain high, both locally over the Abu Musa territorial dispute, and also regionally. However, the UAE's close alliances with the US and its fellow GCC members should provide protection to the UAE in the event of a regional conflict with Iran - an outcome that may or may not directly involve the Emirates.

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