Slovakia Defence and Security Report 2016
BMI View: We expect Slovakia's defence budget to start rising again - albeit modestly - in 2016, after aperiod of decline following the global financial crisis. This slight increase will be driven by the need tomodernise the Slovak armed forces in order to comply with requirements attached to EU and NATOmembership, particularly in terms of efficiency and interoperability. The government is likely to focusspending on the replacement of ageing equipment (primarily in the land segment over the short term, andthe aerospace segment over the medium-to-long term), while investment into development of the domesticdefence sector will remain limited. Consequently, we expect foreign arms suppliers to capture a large shareof the country's defence procurement contracts over the next five years.
Slovakia's domestic defence sector - while substantial in terms of size when the territory was still part ofCzechoslovakia - has seen very little development since the country gained independence in 1993.
Moreover, the budget cuts that Bratislava had to make in the years after the global financial crisis hit thelocal industry hard. Consequently, the Slovak defence sector remains dominated by a number of smallcompanies focusing on relatively low-tech segments in which they have an established presence - such aslight arms and ammunition and armoured vehicles. We do not expect this to change over our forecast periodto 2019, as Slovakia's 2013 Defence White Paper does not outline a strategy for development of the localmilitary manufacturing base.
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