The Argentine defence budget expenditure is projected to grow at a compound annual growth rate (CAGR) of 13.75% to reach $10.5bn by 2022, according to a report by GlobalData.
Titled ‘Future of the Argentina Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2022’, the report attributes the growth to the modernisation and procurement programmes of the armed forces, as well as the Falkland Islands territorial dispute with the UK.
Argentina’s capital expenditure on defence stands at $1.5bn in 2017 and is forecast to grow at a CAGR of 10.58% to $2.3bn in 2022. The growth in capital expenditure has been primarily due to the procurement of advanced defence equipment and the improvement of defence manufacturing capabilities. Aircraft accounted for the biggest share of arms imports at 72% from 2012 to 2016.
Weapon modernisation, another area of focus for Argentina, is expected to contribute to increasing imports, according to the report. In addition, the submarine and multi-role aircraft sectors are expected to offer increasing opportunities for equipment suppliers.
The report also claims that Argentina’s domestic manufacturing capabilities are limited to trainer aircraft, transport aircraft, submarines and small arms. The country is, therefore, focusing on the development of an indigenous defence industrial base to minimise its dependency on foreign suppliers. It is also undertaking joint agreements and projects in order to boost its indigenous manufacturing capabilities.
With these trends anticipated to continue in the future, the country is expected to spend a total of $42.3bn during 2018–2022, with an averaging GDP of 1.1%. Revenue expenditure is also expected to increase at a CAGR of 14.73%, according to the report.
Argentina’s Mirage fighters were decommissioned in 2015, creating a gap for fighter aircraft. The army has expressed interest in ordering 20 units of either J-20 or JF-17/FC-10 Thunder aircraft, while the Navy plans to acquire five units of Chinese P18 corvettes.
With the country facing economic turmoil, the procurement decision has been deferred. Argentina, however, plans to place an order for fighters and corvettes in the future once the economy stabilises.