Finland's defence expenditure is set to soar as it bolsters its military forces, integrates with NATO, and addresses security concerns following Russia's invasion of Ukraine.
The Finnish Navy, Air Force, and Army are set to benefit from the increased defence budget, projected to reach $6.3bn in 2023.
Finland's defence budget is rising as it enhances its military capabilities across the Navy, Air Force, and Army. Information from GlobalData's "Finland Defence Market 2023-2028" report reveals a surge in funding to address security concerns and modernise the defence forces.
In response to the fallout from Russia's invasion of Ukraine in 2022, Finland has abandoned its long-standing policy of neutrality and embarked on a path of increased defence spending. The projected defence budget of $6.3bn in 2023 reflects a substantial growth from $3.5bn in 2019.
The Finnish Navy, Air Force, and Army are all set to benefit from this increased defence budget. The Navy focuses on upgrading its primary surface fleet by acquiring Pohjanmaa-class corvettes designed to defend the Finnish coastline.
The Air Force is replacing its fourth-generation fighter aircraft with 64 F-35A stealth fighters, making Finland the third Nordic country to operate this advanced aircraft. The F-35 program, with a total value of $4.3bn, forms the largest sector in Finland's defence market. Lockheed Martin is the primary supplier for this program, and it also includes industrial benefits for Finland.
Acquiring the Common Armored Vehicle System (CAVS) is a priority in the Army. This multinational joint armoured vehicle program involves Finland, Estonia, Sweden, Latvia, and Germany, with Patria Oyj as the primary supplier. The Finnish Army has also procured the K9 Thunder 155mm self-propelled howitzers, enhancing its long-range artillery support capabilities.
Finland's defence budget breakdown reveals significant growth in the "Acquisitions" category, reflecting a CAGR of 36.8% for the historic period. 2028 procurement is anticipated to constitute up to 57.4% of the defence budget.
As Finland integrates with NATO and invests in modernisation, its defence industry is expected to grow. Finnish companies will have opportunities to develop manufacturing capacity for the F-35 program and contribute to domestic production.
Finland's decision to join NATO in April 2023 has significantly influenced its defence budget and strategy. The country is actively working to integrate its military structures with its new allies, ensuring its ability to address security concerns and enhance its defence readiness.
The increased defence expenditure reflects Finland's commitment to safeguarding national security in an evolving geopolitical landscape.
