HELSINKI: inland is a geo-strategically vital base due to its vicinity to Russia. The political and military development in Russia significantly influences the country’s security. The Baltic Sea is a predominant logistic transport corridor for Finland, and Russia’s rising interests in this area is likely to impact the security of the country. The Finnish annual defense budget stands at US$3.5 Billion in 2018, and is expected to grow at a CAGR of 11.25% over the forecast period.Defense expenditure as a percentage of Gross Domestic Product (GDP) recorded an average of 1.3% during 2014–2018. As a result of the government’s effort to reduce debt and focus on enhancing employment within the country, it is expected to increase to 1.7% in the forecast period.
Finland capital expenditure is expected to increase significantly registering a CAGR of 10.80% during the forecast period. The Finnish Defence Ministry is expected to procure fighters and multi-role aircraft, corvettes and land based C4ISR. Furthermore, during the forecast period, Finland is expected to allocate as much as 67.6% of its defense budget towards revenue expenditure, which will be used to pay pension allowances to retired military personnel, salaries, training and other administrative activities.Finland’s total defense expenditure stands at US$3.5 billion in 2018, and is expected to grow at a CAGR of 11.25% over the forecast period, to reach US$5.6 billion in 2023. Finnish defense expenditure is primarily driven by participation in peacekeeping initiatives, the soldier modernization program, naval fleet modernization initiatives and the procurement of advanced technology equipment. Finland is an active participant in the crisis management programs mandated by the United Nations (UN). The Finnish defense industry is expected to focus its expenditure on Leopard 2A6 main battle tanks, multi-role aircraft, modernizing corvettes and acquiring land based C4ISR systems.
Finnish defense capital expenditure is expected to increase from US$2.5 billion in 2019 to US$3.4 billion in 2023, growing at a CAGR of 7.63%. The Finnish Defense Ministry is expected to procure multirole fighter aircraft, search and rescue helicopters, armored vehicles, main battle tanks, cyber security, a joint strike missile (JSM) system, and submarines. Revenue expenditure is expected to increase from US$4.6 billion in 2019 to US$5.5 billion in 2023, attributed to additional training and development programs that are to be undertaken over the forecast period.