The Belgian Defense Market will increase from US$305 to US$331

Wednesday 21 March 2012, Amsterdam

Due to the Belgium government’s increase in defense expenditure in the forecast period, per capita defense expenditure is likely to increase from US$305 to US$331. In the same period, the population of Belgium is also expected to increase from 11.07 million people to 11.39 million people. 

During the review period, equipment expenditure stood at 17.7% of Belgium’s total defense capital budget, and in the forecast period this is likely to increase to 19.8%. The increase is expected because of the government’s policy of allocating funds released from troop reductions to the procurement of defense equipment.  Furthermore in the review period, defense expenditure was 0.8% of Belgium’s total GDP, and therefore stood well below the NATO guideline requiring a minimum expenditure of 2% of GDP. Although Belgium’s GDP is likely to increase in the forecast period, its defense expenditure will reduce due to defense budget cuts instigated by Belgium’s public debt.

In the forecast period there will be defense budget cuts in Belgium to reduce the country’s fiscal deficit, and this will hinder growth in its defense industry. Since Belgium procures the majority of its defense equipment from domestic companies, defense budget reductions are expected to impact both its domestic defense industry and defense imports negatively.

Imports are expected to decline due to defense budget cuts announced by the Belgian government whereas the government is expected to support defense export by way of large investment in advanced technology and R&D.

The defense budget personnel expenditure registered a CAGR of -3.23% during the review period due to the reductions in troop numbers. As a result of the global economic crisis and the high percentage of public debt in GDP, the Belgian government plans to reduce its fiscal budget over the forecast period, and this will result in further defense budget cuts. Consequently, there will be a decline in personnel expenditure as troop numbers are further reduced, leading to a predicted CAGR for personnel expenditure of 1.87% during the forecast period.