Table of Contents 1. Introduction 6 1.1. What is this Report About? 6 1.2. Definitions 6 1.3. Summary Methodology 8 1.4. About Strategic Defence Intelligence 10 2. Executive Summary 11 3. Market Attractiveness and Emerging Opportunities 12 3.1. Current Market Conditions 13 3.1.1. Military fleet size 13 3.1.2. Procurement Programs 16 3.1.3. Key Drivers and Challenges 16 3.2. Defense and Security Market Size Historical and Forecast 18 3.2.1. Lebanese defense and security expenditure expected to grow at a CAGR of 5.01% over the forecast period 18 3.2.2. Cross border violence expected to be a key factor driving defense expenditure 21 3.2.3. Defense budget as a percentage of GDP expected to increase over the forecast period 22 3.3. Analysis of Defense Budget Allocation 24 3.3.1. Capital expenditure allocation to average 32.4% of the total budget over the forecast period 24 3.3.2. Capital expenditure to grow at a CAGR of 5.41% over the forecast period 26 3.3.3. Per capita defense expenditure expected to increase over the forecast period 28 3.4. Homeland Security Market Size and Forecast 30 3.4.1. Sectarian violence and drug trafficking will be the key factors driving homeland security 30 3.4.2. Lebanon considered in the ‘highly affected’ category in terms of terrorist attack 31 3.4.3. Lebanon faces “high risk” from acts of terrorism 32 3.4.4. Lebanon has a terrorism index score of 5.6 34 3.5. Benchmarking with Key Global Markets 35 3.5.1. Lebanon to remain at the bottom of the Top defense spenders list 35 3.5.2. The country’s defense budget is low compared to other Middle Eastern countries 37 3.5.3. Lebanon’s defense expenditure as a percentage of GDP to average 4.8% over the forecast period 38 3.6. Market Opportunities: Key Trends and Drivers 39 3.6.1. Top 10 Defense market sectors by value (US$ Million) - Projections over period 2018-2023 39 4. Defense Procurement Market Dynamics 40 4.1. Import Market Dynamics 41 4.1.1. Defense industry heavily relies on imports from foreign countries 41 4.1.2. The US is the key defense suppliers to Lebanon 42 4.1.3. Armored vehicles, artillery and missiles dominated Lebanese defense imports during the historic period 43 4.2. Export Market Dynamics 44 4.2.1. Lebanon’s defense export market is negligible 44 5. Market Entry Strategy 45 5.1. Market Regulation 45 5.1.1. The Lebanese Government prohibits FDI in the defense industry 45 5.1.2. Lebanon does not disclose any offset obligations imposed by the country 45 5.2. Market Entry Route 46 5.2.1. Government-to-government deals are the preferred market entry route for foreign OEMs 46 6. Competitive Landscape and Strategic Insights 47 6.1. Competitive Landscape Overview 47 6.1.1. Lebanese defense sector is dominated by foreign competitors 47 7. Business Environment and Country Risk 48 7.1. Economic Performance 48 7.1.1. GDP per Capita 48 7.1.2. Gross Domestic Product 49 7.1.3. National Disposal Income (US$ Billion) 50 7.1.4. Exports of Goods and Services 51 7.1.5. Imports of Goods and Services 52 7.1.6. LCU per USD (period average) 53 7.1.7. Market Capitalization of Listed Companies 54 7.1.8. Market Capitalization of listed companies as a % GDP 55 7.1.9. Total Government Cash Surplus/Deficit as % of GDP 56 7.1.10. Goods Exports as a % of GDP 57 7.1.11. Goods Imports as a % of GDP 58 7.1.12. Services Imports as a % of GDP 59 7.1.13. Services Exports as a % of GDP 60 7.1.14. Net Foreign Direct Investment 61 7.1.15. Net Foreign Direct Investment as % of GDP 62 7.1.17. Mining, Manufacturing, Utilities Output 63 8. Appendix 64 8.1. About SDI 64 8.2. Disclaimer 64

List of Tables Table 1: Lebanon - Army Strength 13 Table 2: Lebanon - Navy Strength 14 Table 3: Lebanon - Air Force Strength 15 Table 4: Lebanon - Ongoing Procurement Programs 16 Table 5: Lebanon - Ongoing Procurement Programs 16 Table 6: Lebanon - Defense and Security Expenditure (LBP Trillion and US$ Billion), 2014-2023 19 Table 7: Lebanon - GDP Growth v/s Defense Expenditure According to Percentage of GDP Growth, 2014-2023 22 Table 8: Lebanon - Defense Budget Split by Capital and Revenue Expenditure (%), 2014-2023 24 Table 9: Lebanon - Defense Capital Expenditure (LBP Trillion and US$ Billion), 2014-2023 26 Table 10: Lebanon - Per Capita Defense Expenditure (US$), 2014-2023 28 Table 11: Terrorism Index, 2018 32 Table 12: Benchmarking with Key Markets - 2014-2018 vs. 2019-2023 35 Table 13: Top Lebanon Defense Market Sectors by Value (US$ Million) - 2018-2023 39 Table 14: Lebanon - Competitive Landscape of Defense Industry, 2018 47List of Figures Figure 1: Lebanon - Defense and Security Expenditure (LBP Trillion), 2014-2023 20 Figure 2: Lebanon - Defense and Security Expenditure (US$ Billion), 2014-2023 20 Figure 3: Lebanon - GDP Growth vs Defense Expenditure According to Percentage of GDP Growth, 2014-2023 23 Figure 4: Lebanese - Defense Budget Split by Capital and Revenue Expenditure (%), 2014-2023 25 Figure 5: Lebanon - Defense Capital Expenditure (LBP Trillion), 2014-2023 27 Figure 6: Lebanon - Defense Capital Expenditure (US$ Billion), 2014-2023 27 Figure 7: Lebanese Per Capita Defense Expenditure (US$), 2014-2023 29 Figure 8: Terrorism Heat Map, 2018 31 Figure 9: Terrorism Index, 2018 34 Figure 10: Benchmarking with Key Markets - 2014-2018 vs. 2019-2023 36 Figure 11: Benchmarking with World’s Largest Defense Spenders (US$ Billion), 2018 and 2023 37 Figure 12: Benchmarking with Large Defense Spenders as % of GDP-2018 38 Figure 13: Lebanese Defense Import Trend, 2013-2017 (TIV values) 41 Figure 14: Lebanese Defense Imports by Country (%), 2013-2017 42 Figure 15: Lebanese Defense Imports by Weapon Category (%), 2013-2017 43 Figure 16: Lebanese GDP per Capita (US$), 2015-2025 48 Figure 17: Lebanese GDP (current US$ Billion), 2015-2025 49 Figure 18: National Disposable Income (US$ Billion), 2001-2010 50 Figure 19: Lebanese Exports of Goods and Services (current US$ Billion), 2005-2013 51 Figure 20: Lebanese Imports of Goods and Services (current US$ Billion), 2005-2013 52 Figure 21: Lebanese LCU per USD, 2016-2025 53 Figure 22: Lebanese Market Capitalization of Listed Companies (US$ Billion), 2005-2012 54 Figure 23: Lebanese Market Capitalization of Listed Companies (%of GDP), 2005-2012 55 Figure 24: Lebanese Total Government Cash Surplus/Deficit as % of GDP, 2005-2012 56 Figure 25: Lebanese Goods Exports as a % of GDP, 2005-2013 57 Figure 26: Lebanese Goods Imports as a % of GDP, 2005-2013 58 Figure 27: Lebanese Services Imports as a % of GDP, 2005-2013 59 Figure 28: Lebanese Services Exports as a % of GDP, 2005-2013 60 Figure 29: Lebanese Net Foreign Direct Investment (US$ Billion), 2005-2013 61 Figure 30: Lebanese Net Foreign Direct Investment as % of GDP, 2005-2013 62 Figure 31: Mining, Manufacturing, Utilities Output (in Millions), 2005-2014 63

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