Latin America Defense Market: Hot or Not?

Americas Society/ Council of the Americas has an interesting infographic on Defense spending by Latin American countries in 2013 (see below). While worldwide Defense spending fell 1.9% in 2013, it actually increased in Latin America by 2.2%. Gangs, drugs, and other transnational criminal activities are driving military expenditures.

A couple of things to keep in mind:

  • Increases vary significantly by country. Honduras, Nicaragua, and Paraguay had the greatest increases, while Brazil (the region’s biggest spender by a very wide margin) had a decrease of 3.9%.
  • Defense spending has dramatically increased everywhere since 2005. So even though Brazil actually cut its 2013 budget, it still much larger than it was just a few years earlier.
  • Everybody wants to sell to Latin America. Chinese and Russian presidents conducted high profile tours of Latin America, specifically to strengthen Defense and security ties. Brazil is expected to accept delivery of Russian anti-aircraft missile systems in 2016.

What about 2014?

Do the 2013 trends illustrated by the infographic hold true today?  Americas Society/ Council of the Americas drew their facts and figures from research by the Stockholm International Peace Institute, so I visited their website to find more up-to-date information.

According to their Trends In World Military Expenditure, 2014 (2015 is not available yet) “….spending in Latin America was essentially unchanged” for 2014.

In fact, “Total military spending in South America was $67.3 billion, down 1.3 per cent in real terms since 2013…” For the second year in a row, Brazil again cut military spending marginally (1.7%). For more details on 2014, see the table below the infographic.

Even with these slight decreases, overall Latin American Defense spending was still higher than 2005 by a whopping 48%.

To make sense of this data, I contacted James Bell, AMREL’s Director of Sales for Latin America. He has many years of experience and is an expert on these markets.  His reply:

“Military spending in Latin America has slowed somewhat due to dramatic changes in the currency exchange rates during 2015 in favor of the US$ — making the purchase of imported products 20% – 30% more expensive.  This has the effect of governments cancelling more expensive military programs in favor of smaller, more highly focused solutions.”

In the case of Brazil, the Stockholm International Peace Institute also cited social protests and a stalled economy as reasons for the flat expenditures.

AMREL has not noticed any significant change in the level of acquisition of our products by Latin America. Interest continues to be shown in our DK tablets and our RK laptops.

If you have questions about this important market, please contact James Bell at jimb@amrel.com

latin america

Source: Americas Society/ Council of the Americas

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latin america 2014

Source: Trends In World Military Expenditure, 2014