2014-02-04 03:47:02 - Future of the Belgian Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2018 - a new market research report on companiesandmarkets.com
The budget of the Belgium defence market, valued at US$3.6 billion in 2013, is estimated to register a CAGR of -2.82% to reach US$3.1 billion by 2018. This decrease in spending is expected to be primarily due to the country´s public debt, which will force Belgium to cut its defence budget over the forecast period. Primarily driven by military modernization programs and joint operations, the country´s defence expenditure is expected to focus more on the procurement of equipment for its maritime security, counter terrorism capabilities, and cyber security over the period 2014-18. The country´s defence imports and exports are expected recover from the slump experienced from 2010 due to the global economic slowdown.
Belgium´s defence expenditure over the forecast period is
expected to be driven by the need to modernize its armed forces and participation in joint operations with its NATO allies. Belgium´s defence budget cuts have affected its defence equipment procurement during the review period, along with a 50% reduction in the size of its armed forces over the past decade. In its long-term strategic modernization plan , the country outlined its efforts to realign its military to be prepared for changing geo-strategic environment. Belgium stated ´increasing equipment expenditure per soldier´ as one of its goals in the ´Defence and Security Investment Plan´.
In 2010, the government announced defence budget cuts in order to control the country´s increasing fiscal deficit. In order to make the budget reductions, the government decided to reduce the size of its military, as the country deploys its troops for peacekeeping rather than defence purposes. In addition to this, Belgium plans to modernize its military workforce and equipment, and the money released through troop reductions is expected to offset the required modernization expenditure on equipment. Since there are no significant terrorist threats to Belgium and it is surrounded by European countries, its defence budget is likely to remain low in the forecast period, and this will pose a challenge for both established defence companies and those wishing to enter the market.
As Belgium is a member of the European Defence Agency (EDA), which was formed to improve European defence capabilities and to create a single defence equipment market, it gives preference to European nations in its defence contracts. As a result, Belgium takes part in several European defence programs, such as the Airbus A400M and the European Air Transport Fleet program. The EDA has simplified the defence trade within Europe through measures such as its electronic bulletin board (EBB), which requires all member countries to post defence contract opportunities, so that all opportunities are available for all member countries to easily access in one place. In addition to this, in 2009 the EU issued a directive which simplified the terms and conditions of the transfer of defence products within the EU, and the coordination procedures for the award of certain contracts related to defence. As the defence trade has been simplified within the EU and Belgium is a member of the EDA, the government gives preference to European companies for imports and contracts, and this acts as a barrier to entry for non-European countries in the defence industry.
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