29 Jul 2021
Posted in Aerospace, Defense & Security
Hungary unlikely to meet its Zrínyi 2026 spending target due to economic impact of COVID-19, says GlobalData
Hungary’s defense budget saw an increase over the 2017-2021 period due to the announcement of its modernization program, Zrínyi 2026. The government will develop its defense fleet through several important procurements and increase its defense expenditure to reach 2% of its overall GDP by 2024. However, Hungary is unlikely to meet its Zrínyi 2026 spending target due to the economic impact of COVID-19, says GlobalData, a leading data and analytics company.
According to GlobalData’s report, ‘Hungary Defense Market – Attractiveness, Competitive Landscape and Forecasts to 2026’, Hungary’s defense budget saw a -4.3% year-on-year (Y-o-Y) change from 2020, decreasing from US$2.8bn in 2020 to US$2.7bn in 2021 as the country experienced an economic downturn due to the COVID-19 pandemic. Although defense expenditure is expected to witness a steady increase over 2022–2026 with a compound annual growth rate (CAGR) of 6.65%, it would only amount to 1.7% of the country’s GDP, rather than the 2% needed to meet its spending target.
According to the modernization plan, the increase in spending to reach 2% of the country’s overall GDP is required to achieve the necessary upgrades and acquisitions. This also meets NATO’s defense expenditure targets of 2% of a country’s total GDP. Secondly, the increase in defense spending would strengthen Hungary’s domestic defense industry by producing equipment for export. Hungary is expected to invest in advanced technologies and cybercrime control systems in addition to traditional military equipment.
Chloe Glynn, Intern at GlobalData, comments: “Several partnerships and agreements have already formed, such as the acquisition of the Austrian defense company, Hinterberger Defence, and the signing of an agreement with Czech arms-manufacturer, Česká Zbrojovka, to build an arms factory. Finally, the program has led to the procurement of a large number of tanks, armored vehicles, helicopters and associated weaponry.
“Global military spending has increased by 2.6% despite the pandemic. Hungary’s aim at modernization and acquisitions should follow the same trend of delayed, but growing military spending.”