Hungary Defence & Security Q1 2018
BMI View: Hungarian defence spending remains relatively modest compared to the Europe region as a whole, but it is increasing considerably in the wake of the migrant crisis and NATO pressure to increase defence spending. We forecast that military spending will rise to 1.2% of GDP in 2018, reaching USD1.6bn, as the government plans a significant expansion in the reserve forces, higher salaries for military personnel and a major strengthening of police and border security amid the ongoing migrant crisis. Technologically advanced equipment such as aircraft, will continue to be sourced from abroad, as local manufacturers lack design and production capabilities, although there is potential for some ageing equipment to be modernised in Russia. Meanwhile, with limited state investment into defence R&D, we expect Hungarian defence exports to remain modest over our forecast period - although we do see some potential for growth in niche segments.
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