The Military Market for Latin America

摘要

Despite declines between 2014 and 2016, Forecast International expects defense spending in Latin America to increase at an annual rate of about 5.3 percent between 2017 and 2021. During that time, defense spending in the region will total $350.3 billion. Totals will increase from $61.3 billion in 2017 to $79.5 billion in 2017. The top eight defense markets over that time will be Brazil, Colombia, Mexico, Venezuela, Argentina, Peru, Cuba, and Chile. These countries will account for $321.3 billion in defense spending between 2017 and 2021, representing 91.7 percent of the total market in the region. The primary obstacle to defense spending in most Latin American countries continues to be a cycle of economic advances and declines, making it hard for governments to provide a steady flow of funding for their militaries. Latin American economies are heavily reliant on commodity exports, meaning swings in commodity prices heavily affect economies in the regions, and therefore government revenue. With China's economy slowing down, Latin American countries have had to deal with low prices since 2014, hurting defense spending. Another factor reducing the demand for military equipment is the low level of military and diplomatic threats in the region. Latin American countries are largely at peace with each other. There are a few border disputes that flair up from time to time, but since a 1995 border war between Ecuador and Peru, these disputes have not created armed conflict. The greatest threat to most Latin American governments is internal. Even though economies decline and military disputes are infrequent, threats from drug traffickers, violent gangs, and insurgents is driving defense spending in the region. Countries such as Colombia, Mexico, and Peru are spending money to battle internal conflicts. These threats are expected to continue for the next few years, driving defense spending. The types of conflict determine the types of equipment that Latin American militaries will need. Without major military conflicts, heavy expensive weapons such as supersonic jet fighters, tanks, and destroyers are not needed. On the other hand, equipment that excels in counterinsurgency and rapid reaction environments will be purchased. These include small arms, helicopters, patrol boats, armored vehicles, trucks, and communications equipment. Latin American nations will also purchase turboprop-powered aircraft, such as the Embraer Super Tucano and the Beechcraft T-6, rather than jet fighters. The smaller, slower aircraft are better suited to intercepting drug traffickers and providing support during counterinsurgency missions. Mexico, for example, recently retired its F-5 jet fighters with no intention to replace them. These weapons allow militaries to respond quickly to threats as they arise. There are some exceptions, such as Chile, Brazil, and Venezuela. Companies wanting to do business with Latin American militaries will need to sell and support equipment that is ideal for the types of conflicts they encounter. Competition in Latin America can be intense. Latin American governments are relatively transparent. Most publicly issue budget requests and hold open competitions for military acquisitions. This puts their governments in a position to assess competitors based on price, performance, and other factors. Companies will need to be ready to compete in order to win contracts. In addition to price and capability, many Latin American governments look for technology transfers, industrial offset agreements, and local production promises from any potential seller. As governments in the region look to develop their own industrial capabilities as a way to increase employment, these agreements will become more popular. Brazil, for example, will only make deals with contractors willing to share technology and set up local production.