Finland’s defence budget is anticipated to reach $5.6bn by 2023, witnessing a compound annual growth rate (CAGR) of 11.25% over the forecast period, according to a report by Strategic Defence Intelligence (SDI).
Titled ‘Future of the Finnish Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2023’, the report provides insights about the Finnish defence industry.
The annual defence spending reached $3.5bn in 2018 and the country’s cumulative expenditure on its armed forces is expected to stand at $22.7bn during the forecast period.
International peacekeeping missions, upgrade initiatives and a perceived security threat from Russia are expected to drive the rise in military expenditure during the period.
As a percentage of gross domestic product (GDP), Finland’s defence spending registered an average of 1.3% between 2014 and 2018 and is expected to average 1.7% in the forecast period owing to the government’s aim to reduce debt and increase employment opportunities within the country.
The allocation of capital expenditure is expected to rise to $1.8bn in 2023 from $1.1bn recorded in 2018, registering a CAGR of 10.80% during the forecast period, the report added.
Procurement of fighter jets and multi-role aircraft, corvettes and land-based C4ISR, in addition to an allotment of 67.6% of Finland’s defence budget towards revenue expenditure are reported to be the primary reasons for the increase in budget.
The country’s homeland security (HLS) spending is expected to rise from $1.8bn in 2018 to $2.2bn in 2023, representing a CAGR of 3.82% during the forecast period.
Military imports and exports are also anticipated to increase between 2019 and 2023.
Finland is encouraging joint research and collaborations with domestic defence companies in addition to supporting foreign investors to enter the defence industry.