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

Table of Contents

1. Introduction 7

• 1.1. What is this Report About? 7
• 1.2. Definitions 7
• 1.3. Summary Methodology 9
• 1.4. About GlobalData 10

2. Executive Summary 11

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 16
  • 3.1.3. Key Drivers and Challenges 17
  • 3.1.4. Proposed arms embargo against Georgia makes it difficult for defense companies 17
• 3.2. Defense Market Size Historical and Forecast 18
  • 3.2.1. Georgian defense expenditure excluding US, aid to post a CAGR of 5.28% over the forecast period 18
  • 3.2.2. Georgia’s aggregate defense expenditure - inclusive of US military aid - will post a forecast-period CAGR of 3.84% 20
  • 3.2.3. NATO membership, threats posed by Russia, and counter-terrorism and modernization plans drive defense expenditure 23
  • 3.2.4. Military expenditure as a percentage of GDP is expected to decline over the forecast period 24
• 3.3. Analysis of Defense Budget Allocation 26
  • 3.3.1. Share of capital expenditure to increase over the forecast period 26
  • 3.3.2. Financial Aid from the US contributes a major share of the country’s capital expenditure 28
  • 3.3.3. Capital expenditure excluding US Aid to increase over the forecast period 29
  • 3.3.4. Per capita defense expenditure to rise over the forecast period 31
• 3.4. Homeland Security Market Size and Forecast 33
  • 3.4.1. Homeland security (HLS) expenditure expected to grow over the forecast period 33
  • 3.4.2. Human trafficking, drug trafficking, and internal disputes to drive homeland security expenditure 35
  • 3.4.3. Georgia faces a moderate level of terrorist threat 36
  • 3.4.4. Georgia faces moderate level of threat from foreign terrorist organizations 37
  • 3.4.5. Georgia has a terrorism index score of 2.1 39
• 3.5. Benchmarking with Key Global Markets 40
  • 3.5.1. Georgian defense expenditure expected to remain low compared to leading spenders 40
  • 3.5.2. The country’s defense budget is high compared to its regional countries 42
  • 3.5.3. Georgia defense expenditure as a percentage of GDP is expected to decrease 43
• 3.6. Market Opportunities: Key Trends 44
  • 3.6.1. Top 10 Defense market sectors by value (US$ Million) - Projections over period 2018-2023 44

4. Defense Procurement Market Dynamics 45

• 4.1. Import Market Dynamics 46
  • 4.1.1. Defense imports expected to decrease over the forecast period 46
  • 4.1.2. The US was the primary supplier of military platforms to Georgia 47
  • 4.1.3. Naval vessel were the major imported military hardware during 2013-2017 48
• 4.2. Export Market Dynamics 49
  • 4.2.1. Georgia does not export arms due to an undeveloped domestic arms industry 49

5. Industry Dynamics 50

• 5.1. Market Regulation 50
  • 5.1.1. Georgia does not disclose any offset obligations imposed by the country 50
  • 5.1.2. FDI in the defense sector is permitted only after review by the government 50
• 5.2. Market Entry Route 51
  • 5.2.1. Budgeting Process 51
  • 5.2.2. Foreign military sales (FMS) and direct commercial sales (DCS) preferred market entry routes 52
  • 5.2.3. Establishment of subsidiaries provides an alternative entry route 52

6. Competitive Landscape and Strategic Insights 53

• 6.1. Competitive Landscape Overview 53

7. Business Environment and Country Risk 54

• 7.1. Economic Performance 54
  • 7.1.1. GDP per capita 54
  • 7.1.2. GDP, current prices 55
  • 7.1.3. Export of goods and services (LCU Billion) 56
  • 7.1.4. Import of goods and services (LCU Billion) 57
  • 7.1.5. Gross national disposable income (US$ Billion) 58
  • 7.1.6. Local currency unit per US$ 59
  • 7.1.7. Market capitalization of listed companies 60
  • 7.1.8. Market capitalization of listed companies as a percentage of GDP 61
  • 7.1.9. Government cash surplus deficit as a percentage of GDP 62
  • 7.1.10. Goods Exports as a percentage of GDP 63
  • 7.1.11. Good imports as a percentage of GDP 64
  • 7.1.12. Service imports as a percentage of GDP 65
  • 7.1.13. Service exports as a percentage of GDP 66
  • 7.1.14. Foreign direct investments 67
  • 7.1.15. Net foreign direct investment as a percentage of GDP 68
  • 7.1.16. Mining, manufacturing, utilities output 69

8. Appendix 70

• 8.1. About GlobalData 70