Argentina - Defense and Security: Modernization drives expenditure (Strategy, Performance and Risk Analysis)
The aircraft category is a key growth driver of Argentina’s defense and security industry, accounting for 43.1% of capital expenditure in 2016; followed by naval ships with 13.6%. Modernization initiatives helped strengthen the performance of both categories during the review period and the government intends to invest more in aircraft advancement programs.
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Growth in revenue and CAPEX to support total expenditure:
Argentina’s capital expenditure rose at a CAGR of 2.6%, from US$184.5 million in 2012 to US$204.1 million in 2016; it will post a forecast-period CAGR of 2.0% to reach US$217.7 million in 2021. The increase will be driven by the procurement of advanced defense equipment and the country’s focus on increasing its domestic defense manufacturing capabilities.
Total expenditure registered a CAGR of 2.1%, rising from US$4.3 billion in 2012 to US$4.7 billion in 2016 due to ongoing modernization and procurement programs, territorial dispute with the UK over the Falkland Islands, and the country’s participation in peacekeeping missions. Expenditure will post a forecast-period CAGR of 1.9% to value US$5.1 billion in 2021.
Aircraft category to drive capital expenditure:
The aircraft category drove Argentina’s capital expenditure with a value of US$426.4 million in 2016. It will post a forecast-period CAGR of 6.9% to reach US$652.1 million in 2021 propelled by procurement plans and a focus on improving indigenous industry.
Argentine naval expenditure to record higher growth than the global and regional averages:
Argentina’s capital expenditure on naval ships stood at US$134.8 million in 2016 and will post a forecast-period CAGR of 11.3% to reach US$216.4 million in 2021. The country plans to procure four Israeli high-speed and fully armed river patrol vessels with integrated vigilance systems.