Czech Republic Defence and Security Report 2016
BMI View: We expect the Czech Republic's defence budget to start increasing again in absolute terms inthe next five years. This is in large part a result of the healthy growth the country has been experiencingsince the beginning of 2015. It will be driven in the coming years by the increasing threat represented byRussia in the region, and the Czech government's desire to be able to respond to the security and defencechallenges of the region in accordance with its membership with EU and NATO. As such, defence spendingwill in turn increase the number of procurements as well as investment in the domestic defence sector, thusexpanding opportunities for both international and national companies operating in the defence sector.
The Czech Republic's defence budget has severely suffered, since 2008, from the global financial crisis. Insteep decline between 2009 and 2010, and then in constant, smaller, decrease between 2011 and 2014, thebudget had reached 1% share of the GDP and USD1.8bn. The year 2015 has, however, seen a very healthygrowth of the Czech economy, with a real GDP growth of 4.1%, and we expect that this will continue in thecoming years. As such, the Czech government has decided to significantly increase its defence budget in2015, an increase that we expect will be constant over the medium term.
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