Sunday, 29 April 2012

The Italian Defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2016

London, April 29th, 2012The annual defense budget of Italy in 2011 stood at US$27.34 billion, inclusive of homeland security, defense function and other non-essential expenditures of the military. The defense function budget of Italy’s armed forces recorded a CAGR of -2.41% during the review period and defense expenditure as a percentage of GDP averaged at 1.3%. However, in the forecast period, the country is expected to increase its expenditure in an effort to increase its defense capability and the defense budget is expected to increase 4.46% to value at 1.1% of GDP, by 2016.
The Italian government is keen to continue to modernize its military and equip its forces with the latest technology.  Over the forecast period, government efforts to restore the competency of its forces lost during the period of lower spending will support the national military budget.  Furthermore, The Italian government has awarded high priority to the peacekeeping operations of its armed forces, including UN and NATO missions. Italy is one of the leading contributors to global peacekeeping operations, and is the sixth largest contributor to the UN peacekeeping budget.
Defense imports to Italy fell sharply in 2008–2009, as the country faced high levels of fiscal deficit during these years and, subsequently, reduced its spending. During the forecast period, defense imports are expected to decline further, due to economic crisis in Italy and across Europe. This led to reductions in the defense budgets of many countries, including France, Greece and Poland, which are some of the top importing countries of Italian defense products.  The cuts will decrease the procurement expenditure of these countries and have a negative impact on the order book of the Italian defense industry.
Total defense expenditure as a percentage of GDP is expected to decrease from an average of 1.3% during the review period to 1.1% by 2016 due to cuts to the budget. The defense function budget is also expected to decline from 0.9% of GDP in 2011 to 0.8% by 2016. Despite this, Italian defense expenditure will continue to be driven by the modernization program of the armed forces and the country’s participation in NATO and UN peacekeeping missions.
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