Global defence trade currently stands at $64.4 billion, said the report from the London-based defence specialists.
The figure has been driven by "unparallelled demand from the emerging economies for military aircraft and an escalation of regional tensions in the Middle East and Asia Pacific," IHS expert Ben Moores said.
The report, which examines the defence market across 65 countries, found that Saudi Arabia spent more than $6.4 billion on defence kit in 2014, overtaking India on $5.57 billion.
Saudi Arabian imports increased by 54 percent over the past year and the study predicts that one out of every seven dollars spent on defence exports in 2015 will be spent by the Middle East kingdom.
Saudi Arabia and the United Arab Emirates (UAE) together imported $8.6 billion of defence equipment in 2014, more than the imports of Western Europe combined.
The United States maintained its position as the top exporter, shipping $23.7 billion of equipment, ahead of Russia on $10 billion.
"The biggest beneficiary of the strong Middle Eastern market remains the US, with $8.4 billion worth of Middle Eastern exports in 2014, compared to $6 billion in 2013," said the report.
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Despite Russia's strong performance, boosted by $2.3 billion of sales to China, the study predicted tougher times ahead.
"A drop-off in exports is forecast for 2015 as major programmes draw to a close, a trend that could be accelerated by sanctions," it said.
"Furthermore, falls in the oil price are set to have a devastating impact on some lead Russian clients who are vulnerable to low oil prices, such as Venezuela and Iran."
France was the third biggest exporter ($4.9 billion) followed by Britain ($4.1 billion) and Germany ($3.5 billion).
IHS said China had now become the third largest importer, up from fifth place earlier.
"China continues to require military aerospace assistance from Russia and its total defence procurement budget will continue to rise very quickly," said Paul Burton, director of defence industry and budgets at IHS.
The study pinpointed South Korea a potential regional leader for defence imports.
"South Korea looks set to be the rising star of the Asia Pacific defence industry," it concluded.