South Korea's exports of defense products are expected to suffer a setback as governments around the globe have been cutting military budgets amid the COVID-19 pandemic, a report showed Sunday.

The global defense budget is anticipated to decrease 2.2 percent annually through 2024, according to the report by the Korea Institute for Industrial Economics and Trade (KIET).

The annual overseas military projects won by South Korean businesses have remained flat, hovering around $3 billion from 2016 to 2020. 

The KIET said the sluggish exports are expected to continue over the next five years.

Over the 2015-2019 period, Korea Aerospace Industries Ltd. was the largest exporter of defense products at 2.8 trillion won ($2.47 billion), followed by Hanwha Defense Co. and LIG Nex1 Co. with 949.8 billion won and 916.5 billion won each.

South Korea was the world's 10th-largest exporter in the segment over the five-year period. (Yonhap)