|Jul 2015||70||Business Monitor International||ASDR-209130|
Our View: We expect South Korea’s defence budget to continue increasing in absolute terms in the next
five years. This will be driven by South Korea’s need to maintain well-prepared and well-equipped armed
forces to deter, or defend from, an attack from North Korea. Moreover, the 2014 Defence White Paper puts
significant emphasis on the government’s desire to continue expanding the domestic defence market,
providing additional support to private companies seeking to participate and increasing exports worldwide.
This will contribute to opening up development opportunities for both international and national companies
operating in the defence sector.
The conflict that has been characterising South Korea’s relationship with North Korea in the past sixty years
remains to date the country’s main driver for defence spending. Indeed, despite many attempts from Seoul to
convince Pyongyang to establish a dialogue and resolve the situation peacefully, the latter has continued to
carry out nuclear tests and regularly threatens to attack the former. As such, South Korea is constantly
working to maintain and upgrading the equipment and capabilities of its armed forces in order to be
prepared for an eventual attack or even as a simple deterrent. Significantly supported by the US, which has
29,300 troops on the territory and supplies a significant share of the country’s equipment, South Korea
maintains its advantage over its northern neighbour, but a new strategy is necessary if the situation does not
drastically change in the near future - that is, if North Korea does not collapses.