The defence industry in Chile is one of the largest in Latin America and is expected to grow to US$4 billion by 2017. The Compounded Annual Growth Rate (CAGR) of 9.84% is one of the highest in the world and defence expenditure one of the largest in South America. According to Strategic Defense Intelligence, (SDI) an investment in aviation security, aerial surveillance, and mechanized equipment will drive the industry in the forecast period.
A strong defense budget helps to counter threats from irregular warfare and natural disasters
SDI suggests that defense expenditure in Chile will grow at a CAGR of 12.39% for the reviewed period 2012-2017.
Border disputes, threats from drug traffickers, and the Chilean vulnerability to natural disasters are expected to support the expansion of the industry. Investment in equipment such as hospital ships, medium-lift helicopters, transport aircraft, and thermal cameras and other surveillance equipment is expected to rise.
Military modernization and peacekeeping missions demand more defense spending
The country is planning to take aggressive measures to modernize its military and defense. Peacekeeping efforts and joint training exercises require modernization of weapons. An upgrade of peacekeeping forces will lead to the establishment of more training camps for joint practices and an increase in the import of modern weapons.
Heavy procurement due to changed legislation improves funding for the Chilean Armed Forces
The removal of heavy funding from the Copper Reserve Law for defense has improved the industry’s growth prospects. The new legislation incorporates funds for defense procurement into the regular fiscal budget. The improved access and availability of defense funds is expected to drive the size of the Chilean defense industry.Fuente: www.