Venezuela Defence & Security Report 2016 - New Market Research Report
New Defense market report from Business Monitor International: "Venezuela Defence & Security Report 2016"
[USPRwire, Tue Feb 16 2016] Venezuela's domestic defence sector remains one of the smallest in Latin America in terms of expenditure, which we project at USD5.1bn in 2019. Moreover, in terms of production , Venezuela will remain an insignificant player in the world arms market. Local defence companies are capable of manufacturing a range of equipment - including small arms and ammunitio ns, simple vessels and aircraft , armoured vehicles and textiles - though their ability to develop more technologically advanced items remains limited. As such, the country continues to rely on foreign suppliers to meet the requirements of its armed forces. Over our forecast period to 2019, we expect security threats associated with conflicts involving neighbouring Colombia, local terrorism from drug trafficking group s and political instability to drive domestic demand for military products. As such, we forecast Venezuela's defence budget to grow steadily over the next five years.
Venezuela relies on oil export receipts to fund government spending, and rapidly falling global oil prices heighten the existing risks from economic mismanagement and political instability. We estimate a recessionary environment in 2016, however, the defence budget will continue to rise despite inevitable budget cuts. We forecast defence spending to reach the USD5.1bn mark in 2019. This view is reinforced by the military's influence in government affairs and the fact that it is in President Nicolas Maduro's interest to keep the military on side in the face of his waning popularity.
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Venezuela is set to remain an insignificant player in the global arms market. In the absence of a domestic defence manufacturing sector, it relies heavily on imports. Although the country has developed a number of successful international partnerships, for example with Russia and China, Venezuela suffers from a US embargo of arms deals, limiting its access to cutting-edge technology.
Venezuela's weapon's imports will continue on an upward trajectory, with defence expenditure set to increase from USD2.7bn in 2015 to USD5.1bn in 2019 representing an average 25% y-o-y increase. Arms and ammunition imports will increase by an annual average of 3.6% over the forecast period, from USD2.8mn to USD3.2mn in 2019. The country maintains the 7th largest army in Latin America with a number of 113,560 active personnel and 438,000 reserves.
Venezuela's anti-US foreign policy may start to become an impediment to foreign-sourced funding and arms procurement, as ally Iran moves to the West after an agreement was reached over their nuclear programme. Regionally, Caracas is still aligned with Cuba and faces ongoing tension with pro-US neighbour Colombia amid localised drug trafficking and political insurgencies.
In December 2015, the Venezuelan National Guard received 560 vehicles dedicated for internal operations.
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