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Pakistan Defence and Security Report 2015

Pakistan Defence and Security Report 2015

BMI View: Pakistan's local defence industry remains underdeveloped due to a lack of investment intoR&D, and as such, domestic companies rely heavily on assistance from foreign firms to manufacturesophisticated military equipment. The majority of the armed forces' more high-tech requirements aretherefore predominantly met through imports. However, collaborations between foreign (mainly Chinese)firms and Pakistani entities have resulted in the development of units with significant export potential, suchas the JF-17 fighter jet. Meanwhile Pakistan's defence expenditure remains elevated, due to the threat ofmajor conflict with India and the large number of terrorism organisations operating across the country -ensuring strong demand for new products over our forecast period to 2019.

We expect the defence budget in Pakistan to grow over 2015, as a military scale-up of offensives againstmilitant groups in tribal areas - coupled with continued border skirmishes in Kashmir between India andPakistan - make elevated levels of expenditure necessary. Additionally, any significant reduction in defencespend by Islamabad would likely provoke a reaction from the country's powerful army chiefs - raising thethreat of a military coup. At present, Prime Minister Nawaz Sharif appears unwilling to risk the stability ofhis already fragile rule, and as such we forecast a strong 8% y-o-y defence budget increase to reach a totalof USD8.2bn over 2015. BMI has upgraded the real GDP growth forecast for fiscal year 2014/15 (July-June) to 4.2% from 4.0% previously, and 4.1% in FY2013/14 owing to the support provided by lower oilprices, together with continued progress on economic reforms. This makes any significant cuts in thedefence budget unlikely over the short term.


BMI Industry View
SWOT
Political
Economic
Operational Risk
Industry Forecast
Defence Budget
Table: Defence Expenditure (Pakistan 2012-2019)
Armed Forces
Table: Armed Forces Personnel (Pakistan 2005-2012)
Table: Manpower Available For Military Service (Pakistan 2012-2019)
Defence Trade
Table: Defence Trade Balance (Pakistan 2012-2019)
Defence Exports
Table: Defence Exports (Pakistan 2012-2019)
Defence Imports
Table: Defence Imports (Pakistan 2012-2019)
Macroeconomic Forecasts
Economic Analysis
Industry Risk Reward Index
Pakistan Defence Risk Reward Index
Table: Asia Pacific - Defence Industry Risk Reward Index
Rewards
Risks
Market Overview
Pakistan Security Overview
Domestic Threats
Regional Threats
International Threats
Weapons Of Mass Destruction
Pakistan Defence Market Overview
Domestic Defence Sector
Domestic Defence Market
Table: Pakistan - Bilateral Defence Agreements
Company Profile
Air Weapons Complex
Dr AQ Khan Laboratories
Heavy Industries Taxila
Pakistan Aeronautical Complex
Pakistan Ordnance Factories
Regional Overview
Key Drivers for Spending
Key Trends Over 2015 and Beyond
Key Opportunities
Global Industry Overview
Global Political Themes For 2015
Methodology
Sector-Specific Methodology
Table: Defence Risk Reward Index Indicators
Weighting
Table: Weighting of Defence Risk Reward Index

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