In 2012, the Spanish defense budget is estimated to value US$9.48 billion having recorded a negative CAGR of -6.7% during the review period (2008-2012) due to the budget cuts associated with the effects of the global economic crisis. In total, Spain is expected to spend US$56.68 billion on strengthening its armed forces, of which US$8.43 billion will be allocated for capital expenditure, while US$48.25 billion will be reserved for revenue expenditure. Furthermore, the Spanish defense budget is expected to register a CAGR of 3.2% during the forecast period (2013-2017), to value US$12.08 billion in 2017 (reference graph).
In 2012, the Spanish defense budget decreased by 4.9% from that of 2011 to US$9.48 billion. While Spanish defense expenditure recorded negative growth of -6.7% during the review period, it is expected to record a CAGR of 3.2% during the forecast period. Furthermore, the share of capital expenditure in the total defense budget is also expected to decrease from an average of 18.7% during the review period to 14.9% during the forecast period. As this is expected to reduce market opportunities, investments are expected to fall, which will hinder the growth of the Spanish defense industry.
The growth of the Spanish defense industry is additionally hindered by the project delays associated with the global financial crisis, which lead to project cancellations and rising costs. In particular, the implementation of a European defense industry has caused several project delays, as often member countries are unable to agree unanimously over issues such as specifications.
During 2007–2011, arms imports decreased at a CAGR of -7.6% which reflected the reduction in the Spanish defense budget. However, during the forecast period, the nation is expected to acquire armored vehicles and missile defense systems, as its domestic defense sector is underdeveloped in both of these categories.
Source: ASDReports - Market Research
Date: Jul 25, 2012