Future of the Azerbaijani Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2023

Table of Contents

1. Introduction 6

• 1.1. What is this Report About? 6
• 1.2. Definitions 6
• 1.3. Summary Methodology 8
• 1.4. About GlobalData 9

2. Executive Summary 10

3. Market Attractiveness and Emerging Opportunities 12

• 3.1. Current Market Conditions 13
  • 3.1.1. Military Fleet Size 13
  • 3.1.2. Procurement Programs 18
  • 3.1.3. Key Drivers and Challenges 19
• 3.2. Defense Market Size Historical and Forecast 20
  • 3.2.1. Azerbaijani defense budget to record a CAGR of 5.27% over the forecast period 20
  • 3.2.2. Constant state of dispute with Armenia and military modernization are expected to be the key factors driving defense expenditure 23
  • 3.2.3. The defense budget as a percentage of GDP is expected to increase over the forecast period 24
• 3.3. Analysis of Defense Budget Allocation 26
  • 3.3.1. Procurement of advanced equipment to drive capital expenditure allocation over the forecast period 26
  • 3.3.2. Capital expenditure is expected to grow at a CAGR of 5.25% over the forecast period 28
  • 3.3.3. Per capita defense expenditure expected to increase over the forecast period 30
• 3.4. Homeland Security Market Size and Forecast 32
  • 3.4.1. Protection of energy infrastructure and combating drug trafficking will be the key factors driving homeland security 32
  • 3.4.2. Azerbaijan falls under the “some risk” category on the Terrorism Index 33
  • 3.4.3. Azerbaijani faces “some risk” of acts of terrorism 34
  • 3.4.4. Azerbaijan has a terrorism index score of 1.2 36
• 3.5. Benchmarking with Key Global Markets 37
  • 3.5.1. Azerbaijan’s defense budget is expected to register moderate growth over 2019-2023 37
  • 3.5.2. Azerbaijani defense expenditure is relatively small when compared to the leading defense spenders 39
  • 3.5.3. Azerbaijan spent 3.8% of its GDP on defense in 2018 40
• 3.6. Market Opportunities: Key Trends and Drivers 41
  • 3.6.1. Top Defense Sectors by Value (US$ Million) - Projections over 2018-2023 41

4. Defense Procurement Market Dynamics 42

• 4.1. Import Market Dynamics 43
  • 4.1.1. Azerbaijan’s reliance on military imports is expected to decline over the forecast period 43
  • 4.1.2. Azerbaijan imports the majority of its arms from Russia 44
  • 4.1.3. Armored vehicles, missiles and ships dominate Azerbaijani defense imports 45
• 4.2. Export Market Dynamics 46
  • 4.2.1. Azerbaijan’s defense exports are negligible, however, they are expected to increase considerably over the forecast period 46

5. Industry Dynamics 47

• 5.1. Market Regulation 47
  • 5.1.1. Azerbaijan’s foreign investment policy prohibits FDI in the defense sector 47
• 5.2. Market Entry Route 47
  • 5.2.1. Budgeting Process 47
  • 5.2.2. Government-to-government deals form an attractive entry route for foreign manufacturers 48

6. Competitive Landscape and Strategic Insights 49

• 6.1. Competitive Landscape Overview 49
  • 6.1.1. The majority of defense equipment in Azerbaijan is supplied by foreign manufacturers 49

7. Business Environment and Country Risk 50

• 7.1. Economic Performance 50
  • 7.1.1. GDP Per Capita 50
  • 7.1.2. Gross Domestic Product 51
  • 7.1.3. Exports of Goods and Services (LCU Billion) 52
  • 7.1.4. Imports of Goods and Services (LCU Billion) 53
  • 7.1.5. Gross National Disposable Income 54
  • 7.1.6. LCU per USD (Period Average) 55
  • 7.1.7. Goods Exports as a Percentage of GDP 56
  • 7.1.8. Goods Imports as a Percentage of GDP 57
  • 7.1.9. Services Imports as a Percentage of GDP 57
  • 7.1.10. Services Exports as a Percentage of GDP 58
  • 7.1.11. Foreign Direct Investment, net (BoP, current US$ Billion) 59
  • 7.1.12. Net Foreign Direct Investment as a Percentage of GDP 61
  • 7.1.13. Mining, Manufacturing, Utilities Output (LCU Billion) 62

8. Appendix 63

• 8.1. About GlobalData 63