Canadian defence industry to increase at a CAGR of 3.65%

The Canadian defence industry, which stood at US$19.94 billion in 2012, is expected to increase at a compound annual growth rate (CAGR) of 3.65% throughout the next five years, to reach US$23.38 billion by 2017.

Growth within the Canadian defence industry is expected to be fuelled by the plans of the Canadian Department for National Defence (DND) to upgrade its armed forces' defence capabilities, the deployment of Canadian forces in various peacekeeping missions around the world, and the need to maintain the sovereignty of the Arctic region.

During the past five years Canada spent US$95.39 billion on defence, which is expected to increase to US$109.15 billion through to 2017.

The capital expenditure budget, which stood at an average of 21.7% in the review period, is expected to increase to 26.4% in 2013, but then decrease to 23.6% in 2017, due to the government's modernisation plans.

The homeland security budget, which stood at US$435 million in 2012, is expected to grow at a CAGR of 8.01%during the forecast period, to reach US$556.56 million by 2017.

Over the past five years, Canadian defence imports fluctuated, decreasing during 2007-2009 before increasing significantly in 2010-2011 due to the modernization of the air force, which involved the procurement of helicopters and C 130J aircraft.

In 2009 defence imports fell drastically as the modernization plans moved on to the procurement of armoured vehicles for land forces, for which the domestic defence industry is highly capable, reducing the need for imports.

This started increasing again in 2010 to reach a value of US$342 million by 2011. During the forecast period, defence imports are expected to increase, driven by the demand for sensors and radars.

For more information on the Canadian defence industry, see the latest research: Canadian Defence Industry Report

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