BMI View: Colombian military expenditure will see only a modest decrease in 2016 amid the government's ongoing fiscal consolidation measures. However, defence spending will increase more robustly over the medium-to-long term, reflecting persistent security threats posed by tensions with neighbouring countries (namely Venezuela) and the ongoing fight against drug trafficking and related crime. We expect defence expenditure to remain stable at around 3.6% of GDP over the coming years. Colombia will maintain a large defence trade deficit for the foreseeable future, given the highly underdeveloped state of its local defence sector. The government is seeking to improve this trade balance through the development of the local defence sector; however, efforts are somewhat constrained by a limited defence budget.
|f = BMI forecast. Source: BMI, US Dept. Of State WMEAT|
|Defence expenditure, % of GDP||3.6||3.6||3.6||3.6||3.6|
|Defence expenditure, USDmn||10,301.7||11,438.1||12,724.3||14,295.3||15,840.3|
|Defence expenditure, USD, % y-o-y||-3.0||11.0||11.2||12.3||10.8|
The Colombian government is continuing its fiscal consolidation programme into 2016, and consequently we do not expect strong growth in the defence budget this year. However, the country's Minister of Defence Luis Carlos Villegas has announced an increase in resources for the defence sector in the 2017 budget. The minister estimated that the defence budget would reach USD330bn in 2017.
While Colombians rejected the peace deal between the FARC and government in October's referendum, we believe both sides remain committed to the reconciliation process, and expect the ceasefire to hold in the medium term. That said, risks of hard-line factions of the FARC breaking away and continuing to fight are elevated - and will rise further the longer peace negotiations are dragged out. In any case, security risks will remain high in Colombia in the years ahead, as there are numerous armed groups active throughout the regions now being abandoned by the FARC - many of which are poised to gain control of lucrative drug trafficking routes as they are vacated.
Colombia has delayed its selection of strategic surface platforms.
In August 2016 COTECMAR delivered one surveillance patrol craft to the Colombian Navy.
In July 2016 COTECMAR delivered two amphibious landing ships to the Colombian Navy.
Defence Industry Risk Reward Index
Demand for defence products in Colombia is strong, as the local armed forces seek to replace and modernise ageing equipment given persistent security threats. Funding available for new procurement remains limited, however, amid adverse economic conditions and high military operational and personnel expenses. The domestic defence sector is highly underdeveloped, although, we expect to see it develop and expand over the longer term amid strengthening government support. Overall, Colombia receives a Defence Industry Risk Reward Index Score of 52 out of 100 placing it second regionally.
The Colombia Defence & Security Report features BMI Research's independent forecasts for national and international security, the defence industry, military expenditure, employment in arms production, and arms imports and exports, as well as examining industry trends and prospects, national and multinational arms producers and the regulatory environment.
BMI's Colombia Defence & Security Report provides professionals, consultancies, government departments, regulatory bodies and researchers with independent forecasts and regional competitive intelligence on the Colombian defence and security industry.
- Benchmark BMI's independent defence and security industry forecasts on Colombia to test other views - a key input for successful budgetary and strategic business planning in the Colombian defence and security market.
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Global and Regional Political Outlooks
A strategic overview of the world’s major political risks, identifying countries facing leadership successions and nations at risk of upheaval, inter-state conflict, or separatism and insurgencies, plus a summary of the world’s ‘wild card’ low-probability high-impact risks.
Snapshot evaluation of the major issues affecting the defence and security sectors, economy and politics, with issues subdivided into strengths, weaknesses, opportunities and threats.
BMI Industry Forecast Scenario
Historic data series and forecasts to end-2019 for key industry indicators supported by explicit assumptions, plus analysis of key downside risks to the main forecast.
- Defence Expenditure: Defence expenditure (local currency and USDbn); defence expenditure (% of total budget); defence expenditure per capita (USD); defence budget (local currency and USDbn).
- Armed Forces (to 2012): Manpower available for military service, manpower fit for militaryservice, army personnel, navy personnel,air force personnel, total armed forces, (‘000) (% population).
- Arms Trade: Arms and ammunition exports and imports (USDmn); bombs, grenades and missiles exports and imports (USDmn); revolver and pistol exports and imports (USDmn); weapons excluding guns and swords exports and imports (USDmn).
Political Risk Assessment
Drawing on BMI’s heritage of more than 25 years of Country Risk analysis, this comprehensively evaluates the key risks to domestic politics and foreign relations, focusing on issues most likely to affect either domestic security or the defence sector.
Security Risk Analysis
BMI’s proprietary Security Risk Indices provide investors with a reliable and country-comparable guide to conflict, terrorism and criminal risk, backed up by our analyst’s latest assessment of each component. Furthermore, drawing on our Country Risk expertise, we assess the state’s vulnerability to a serious, or prolonged, terrorist campaign.
Armed Forces Spending/ Expenditure
The reports contain a detailed breakdown of areas of expenditure by the armed forces, these include spending on international deployments, WMDs and missile defence systems as well as individual breakdowns of the cost-per-soldier.
The domestic security overview lists the various potential internal security threats facing a country, ranging from internal security issues such as terrorism, cyber terrorism, crime and drugs, to external security issues including general defence procedures and potential threats from specific countries. The reports also provide a regional overview which details specific issues and flashpoints affecting the Americas, along with potential risks in the coming year.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
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