Future of the Portuguese Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2018

Friday 24 May 2013, Amsterdam

With a defense budget of US$2.9 billion and difficult fiscal condition, Portugal presents few opportunities for foreign defense companies. Portuguese defense budget peaked at US$3.3 billion in 2011 and registered a CAGR of -0.15% during the review period (2009-13) to reach US$2.9 billion in 2013. Fiscal debt and austerity measures affected the country’s military expenditure, which decreased at 21.8% in 2012 but recovered partially in 2013. Over the forecast period (2014-18), Portugal’s defense expenditure is expected to hover around US$3.0 billion and register a CAGR of 0.90%.

 

The country‘s defense exports, which declined in 2011 and 2012, are expected to increase in the forecast period due to its various maintenance, and ship and aircraft component supply contracts. Portugal‘s membership of the consortiums will also increase the country‘s defense exports. The majority of Portugal‘s defense exports are made to Uruguay, Belgium, and Chile, with aircraft and ship components accounting for most of these. During the period 2013-2017, however, the country is expected to sell defense equipment to other countries including Brazil, France, and Egypt. Relations are being established with these countries through the agreement of maintenance contracts and joining product development consortiums.

Portugal imports the majority of its defense equipment as its domestic defense industry is relatively under-developed. Ships, aircraft, and armored vehicles account for the largest expenditure and the country‘s defense imports decreased steeply in 2011 compared to 2010, which was at a peak owing to the procurement of submarines from Germany. Portugal’s arms imports further decreased in 2012 due to the government’s austerity measures. The country‘s main arms suppliers during the period 2008–2012 were the US and the Netherlands.