Latvia is expected to grow its military budget significantly between 2024 and 2028, according to newly published research in GlobalData’s report on the ‘Latvia Defense Market 2023-2028’, published on 17 January 2024.

Latvia is set to increase its defence budget substantially, reaching nearly $1.7bn by 2028, a significant rise from $1.0bn in 2023. This development follows a trend of increased military spending that accelerated in 2022, coinciding with Russia’s invasion of Ukraine. The defence budget growth from 2019 to 2023 showed a compound annual growth rate (CAGR) of 9.0%, which is expected to increase to a CAGR of 10.5% in the period from 2024 to 2028.

In terms of military modernisation, Latvia’s efforts starting before the Ukraine crisis have since gained urgency. The country is finalising the procurement of UH-60M helicopters from Sikorsky and starting to acquire armoured engineering and personnel vehicles.

This modernisation includes tactical communication systems and plans for further acquisitions to update Latvia’s aging fleet. The Latvian Land Forces are looking to replace light utility vehicles that have been in service for many years, and the Naval Forces are due for significant investment, having not received major upgrades in almost a decade. Although Latvia has phased out Soviet-era military equipment, the ongoing modernisation is deemed essential for the nation’s defence capabilities.

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By GlobalData

Despite the increase in funding, the Latvian military remains relatively small, which limits the scope of its procurement projects. Currently, Latvia is in the process of acquiring armoured vehicles, tactical trucks, missile defence systems, and helicopters as part of its plan to ramp up military spending over the next decade.

The 2020 Defense Concept in Latvia also underscores the increasing importance of climate change in national security. Rising sea levels and the potential uninhabitability of certain global regions could lead to heightened inequality, insecurity, and conflict, which may indirectly affect Latvia, particularly in the strategically important Baltic Sea region.