Hungary Defence and Security Report Q1 2011

Date: January 22, 2011
Pages: 84
US$ 1,295.00
Report type: Strategic Report
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ID: HAD3073750DEN

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In 2011, BMI expects defence expenditure of US$1.763bn, or 2.3% of total government spending, up from US$1.681bn in 2010. The Hungarian defence ministry also plans to boost the number of soldiers by 1500 by the end of the current parliamentary term in 2014, according to an October 2010 report from MTI. The number of reserve soldiers is expected to be 6000-8000 by 2014, defence ministry state secretary Istvan Simicsko said.

It is informative that Hungary is bolstering its armed forces at a time when many countries in Europe are scaling theirs back. This may be due to a recognition that recent fiscal cuts have had an adverse impact on the country’s defence, as well as rising concerns that Hungary cannot rely on its NATO partners, and in particular the United States, forever. It may also be linked to concerns about new assertiveness in Russia, traditionally a bugbear of Hungary, and increasingly willing to flex its muscles in its ‘near abroad’, including Ukraine, which borders Hungary. It is also likely to reflect the right-of-centre government’s determination to reaffirm its commitment to defence, partly to distinguish itself from its socialist predecessor and to sap support for the rising hard-right.

The possibility of a war on Hungarian soil in the foreseeable future is miniscule. Nonetheless, the country is keen to ensure it maintains a deterrent force, while being able to despatch troops overseas – even in nominal numbers – to support its international commitments. This will ensure a steady flow of cash into the armed forces. The military is also adapting to the changes in the international security situation, including the rising threat of terrorism and cyber crime. The professionalisation of the military was one vital step in modernisation, but we expect further reforms not only to make the army more efficient, but to make it more responsive to present demands. Hungary, increasingly integrated with the West, is likely to have future forces that are more knowledge- and somewhat less capital- intensive.

BMI therefore believes that defence expenditure will flatline at 1.2% of GDP, where it stands at the time of press, for the rest of the decade. This will be despite above-inflation increases in spending. We forecast that defence expenditure will rise by 4.89% for 2011 in dollar terms, picking up to 11.68% in 2012 as the economy pulls out of the crisis and its wake. From 2013 onwards, we expect expenditure growth to top 6% annually most years, dipping to 5.38% in 2014 and peaking at 6.85% in 2015. At constant prices, in dollar terms, however, spending increases will be quite low, at 2-3%, with a spike to 8% in 2012. As a proportion of government spending, defence spending will rise gently from 2.3% in 2011 to 2.8% in 2019. This will take total defence expenditure to US$3.003bn by the end of the forecast period in 2019, or US$307 per capita."
Executive Summary
SWOT Analysis
Hungary Defence Industry SWOT
Hungary Political SWOT
Hungary Economic SWOT
Hungary Business Environment SWOT
Global Political Outlook
Global Hotspots
  Table: Global Election Timetable, 2010 And 2011
Latin America: More Of The Same
Western Europe
Central Europe
South Eastern Europe
Russia And The Former Soviet Union
Middle East: Mostly The Same Old Challenges
Sub-Saharan Africa: Definitive Elections Pending
Asia: Accommodating A More Powerful China
Wild Cards
Global Security Outlook
Central And Eastern Europe Overview
Security Risk Analysis
BMI’s Security Ratings
  Table: Europe Security Risk Ratings
  Table: Europe State Terrorism Vulnerability To Terrorism Index
Hungary’s Security Risk Ratings
City Terrorism Rating
  Table: BMI’s Central And Eastern Europe And Central Asia City Terrorism Index
Security Overview
Internal Security Situation
Latest Developments
External Security Situation
Latest Developments
Armed Forces And Government Spending
Armed Forces
Defence Reform
International Deployments
  Table: Hungary’s Foreign Deployments
Coordination And Joint Operations
Weapons Of Mass Destruction
Market Structure
Industry Trends And Developments
  Table: Key Players In Hungary’s Defence Industry
Procurement Trends And Developments
Latest Developments
Industry Forecast Scenario
Armed Forces
  Table: Hungary’s Armed Forces, 2000-2008 (‘000 personnel, unless otherwise stated)
  Table: Hungary’s Available Manpower For Military Services
  Table: Hungary’s Defence Expenditure Scenario: Changing % Of Gdp
  Table: Hungary’s Defence Exports 2008-2015
  Table: Hungary’s Defence Imports 2008-2015
  Table: Hungary’s Defence TRADE BALANCE 2008-2015
Macroeconomic Outlook
  Table: Hungary - Economic Activity, 2007-2015
Company Profiles
Danubian Aircraft C
FEG-Army Arms Manufacturing Ltd
BMI Methodology
How We Generate Our Industry Forecasts
Defence Industry
City Terrorism Rating
  Table: Methodology
Sources . 84
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