Latin America Defense Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)

Latin America Defense Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)

The Latin America Defense Market size is estimated at USD 25.36 billion in 2024, and is expected to reach USD 31.41 billion by 2029, at a CAGR of 4.37% during the forecast period (2024-2029).

The Latin American defense market is characterized by a mix of established global defense contractors and emerging local firms. This market encompasses various products, including aircraft, naval vessels, armored vehicles, and cybersecurity systems. In 2023, military expenditures reached USD 62.48 billion, and projections indicate steady growth driven by modernization efforts and regional security challenges.

Many Latin American nations are actively modernizing their military capabilities to address both conventional and asymmetrical threats. Notably, Brazil and Colombia are making significant investments to upgrade their air and naval fleets, incorporating advanced technologies such as UAVs and network-centric warfare systems.

Given their extensive maritime borders, countries like Chile and Brazil strongly emphasize naval enhancements. A testament to this is Brazil's PROSUB program (Submarine Development Program), which aims to bolster its submarine fleet. This program includes the notable construction of the nuclear-powered submarine Alvaro Alberto.

Cybersecurity has become a paramount concern as military operations become increasingly digitized. In response, nations are enhancing their cyber defenses through strategic investments and collaborations with global tech firms. Furthermore, integrating AI, machine learning, and data analytics into defense systems is reshaping operational strategies and bolstering advantages in intelligence, surveillance, and reconnaissance (ISR) capabilities.

Latin America Defense Market Trends

The Air Force Segment Dominates the Market

Heightened investments in advanced fighter jets, surveillance drones, and missile defense systems underscore the region's emphasis on air dominance and strategic aerial capabilities, granting the Air Force segment a significant market share. Rising geopolitical tensions drive defense budgets, leading to increased procurement and modernization of military aircraft and helicopters, marking a notable transformation in the Air Force segment.

As of December 2023, Brazil's Air Force boasts an active fleet of 448 military aircraft and 29 helicopters. Mexico's Air Force operates 268 aircraft and 118 helicopters; Chile's has 153 aircraft and 29 helicopters; Argentina's fields 101 aircraft and 26 helicopters; and Colombia's Air Force has 135 aircraft and 137 helicopters. Countries with operational fleets are ramping up maintenance and repair efforts to ensure peak reliability and readiness, driving heightened demand in the industry. For instance, in June 2023, Embraer secured a contract with the Brazilian Air Force for a midlife upgrade program on the A-29 Super Tucano aircraft, ensuring its operational capabilities and lifespan enhancements.

In the Latin American defense market, especially among air forces, there's a notable uptick in the demand for Unmanned Aerial Vehicles (UAVs). This surge is primarily due to the increasing need for surveillance, reconnaissance, and combat capabilities. Countries across the region are investing in UAVs to bolster defenses against threats like drug trafficking, illegal fishing, and border security challenges, drawn by their versatility and cost-effectiveness.

Brazil’s Defense Market is Witnessing Fastest Growth in Forecast Period

Brazil's defense market is rapidly expanding, driven by escalating security challenges, notable increases in defense budgets, investments in UAV and cybersecurity technologies, and enhanced military infrastructure through international collaborations and modernization efforts. In 2023, Brazil allocated around USD 22.9 billion to its military, a 3% increase from the USD 20 billion spent in 2022. This rise in military expenditure is linked to growing crime rates, narcotrafficking at borders, illegal mining, smuggling, and tensions with neighboring countries such as Argentina and Uruguay.

The augmented budget bolsters border security enhances surveillance and intelligence capabilities, and fortifies defense infrastructure. Brazil's defense, security, and aviation sectors play a pivotal role in the Southern Hemisphere, which is essential for regional stability and addressing diverse security challenges. With one of the region's most capable armed forces, Brazil aims to amplify its power-projection abilities, intensify surveillance over the Amazon and coastal waters, and advance its defense industry. Furthermore, Brazil is modernizing its military platforms and large-caliber weapons to strengthen its armed forces.

Under the new PAC, the Brazilian Air Force emphasizes the renewal of its fighter aviation fleet, spearheaded by the Gripen fighter acquisition. Brazil intends to order four additional Saab-Embraer F-39E jets in addition to the 36 already secured and is contemplating another batch of at least 30 F-39E fighters. Such developments will drive the market across the country.

Latin America Defense Industry Overview

The Latin American defense market remains fragmented. Key players include RAFAEL Advanced Defense Systems Ltd., Elbit Systems Ltd., ASELSAN A.S., THALES, and Lockheed Martin Corporation. The region has numerous local players, many state-owned, and serve only their domestic armed and security forces. Noteworthy examples include Compañía Anonima Venezolana de Industrias Militares (CAVIM) in Venezuela, Fábrica de Armas y Municiones del Ejército (FAME) in Peru, Fábricas y Maestranzas del Ejército (FAMAE) in Chile, and INDUMIL in Colombia.

Even with a robust local presence, international players, particularly from the U.S., Germany, and France, maintain a significant foothold in the market through defense equipment imports. Lockheed Martin Corporation emerges as a frontrunner in the LATAM defense landscape. Its subsidiary, Sikorsky, provides military and rotary-wing aircraft to military and commercial sectors. Companies are also pushing boundaries with innovations to bolster their market share. For instance, in April 2024, FN Herstal, a century-old Belgian firm with deep roots in Latin America, presented its latest firearms in Santiago de Chile. FN Herstal's Latin American journey commenced with FN Mauser rifle sales, later marking milestones with the FN FAL light automatic rifle, FN MAG general-purpose machine gun, and FN GP (High Power) pistol. At the showcase, the company highlighted a variety of small arms, notably the FN HiPer 9mm pistol and the FN EVOLYS ultralight machine gun, both featuring cutting-edge day & night sights.

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