Chile Defence and Security Report 2016
BMI View: Chile's domestic defence sector remains small in a global context. Local defence companies are capable of manufacturing a range of equipment - including small arms and ammunitions, electronics, radars and armoured vehicles - though their ability to develop more technologically advanced items remains limited at present. As such, the country continues to rely on foreign suppliers to meet the requirements of its armed forces. Over our forecast period to 2019, we expect security threats associated with conflicts involving the country's indigenous Mapuche group and participation in international peacekeeping missions and reconstruction efforts to drive domestic demand for military products. As such, we forecast Chile's defence budget to grow steadily over the next five years, in line with the country's overall economic expansion.
Ongoing conflicts involving Chile's largest indigenous group - the Mapuche, which are currently categorised as terrorists under the government's anti-terrorism law - continue to spark violent clashes between elements of Mapuche communities and Chilean security forces. This issue, coupled with reconstruction work related to earthquakes - the latest of which took place in October 2015 - and peacekeeping missions continuing to be a focus of the Chilean government's security policy will drive defence expenditure over the short to medium term. In 2016, we expect the country's defence budget to increase by 9.3%, reaching a total of USD5.12bn.
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