Future of the Hungarian 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 13

• 3.1. Current Market Scenario 14
  • 3.1.1. Primary Threat Perception 14
  • 3.1.2. Military Doctrine & Strategy 15
  • 3.1.3. Military Fleet Size 16
  • 3.1.4. Procurement Programs 18
  • 3.1.5. Social, Political and Economic Environment and Support for Defense Projects 20
  • 3.1.6. Political and Strategic Alliances 21
• 3.2. Defense Market Size Historical and Forecast 22
  • 3.2.1. Hungarian defense budget to record a CAGR of 16.31% over the forecast period 22
  • 3.2.2. The country’s modernization efforts, to meet NATO standards, and its participation in peacekeeping missions will support defense expenditure 24
  • 3.2.3. The defense budget as a percentage of GDP is expected to increase during the forecast period 25
• 3.3. Analysis of Defense Budget Allocation 27
  • 3.3.1. Procurement of advanced equipment to drive capital expenditure allocation during the forecast period 27
  • 3.3.2. Hungarian Defense Capital expenditure is expected to grow at a CAGR of 20.44% over the forecast period 29
  • 3.3.3. Per capita defense expenditure expected to increase during the forecast period 31
• 3.4. Homeland Security Market Size and Forecast 33
  • 3.4.1. Investment in the protection of infrastructure and cyber security are expected to drive the Hungarian homeland security market 33
  • 3.4.2. Hungary falls under “some risk” category on the Terrorism Index 34
  • 3.4.3. Hungary faces “some risk” by acts of terrorism 35
  • 3.4.4. Hungary has a terrorism index score of 0.8 37
• 3.5. Benchmarking with Key Global Markets 38
  • 3.5.1. Hungarian defense budget expected to register rapid growth over the period 2019-2023 38
  • 3.5.2. Hungarian defense expenditure is relatively small when compared to the leading defense spenders 40
  • 3.5.3. Hungary spent about 1.1% of its GDP on defense in 2018 41
• 3.6. Market Opportunities: Key Trends and Drivers 42
  • 3.6.1. Top 10 Defense Sectors by Value (US$ Million) - Projections over 2018-2023 42
  • 3.6.2. Multi-role aircraft 43
  • 3.6.3. Airborne C4ISR 44
  • 3.6.4. Combat Aircraft Engines 45

4. Defense Procurement Market Dynamics 46

• 4.1. Import Market Dynamics 47
  • 4.1.1. Limitations of the domestic defense industry to encourage arms imports 47
  • 4.1.2. Defense imports are forecast to grow during the forecast period 48
  • 4.1.3. Sweden continues to be the major arms supplier to Hungary 49
  • 4.1.4. Aircraft and Missiles dominates Hungarian defense imports 50
• 4.2. Export Market Dynamics 51
  • 4.2.1. Defense exports are forecast to grow during the forecast period 51
  • 4.2.2. Hungary supplies most of its defense equipment to Ethiopia 52
  • 4.2.3. Arms exports likely to increase over the forecast period 52

5. Industry Dynamics 53

• 5.1. Five Forces Analysis 53
  • 5.1.1. Bargaining power of supplier: Low to Medium 54
  • 5.1.2. Bargaining power of buyer: Medium to High 54
  • 5.1.3. Barrier to entry: Medium to High 54
  • 5.1.4. Intensity of rivalry: Medium to High 54
  • 5.1.5. Threat of substitution: Low to Medium 54

6. Market Entry Strategy 55

• 6.1. Market Regulation 55
  • 6.1.1. Offset policy mandates suppliers invest a minimum of 100% of the contract value into the Hungarian economy 55
  • 6.1.2. Hungary allows 100% foreign direct investment with the exception of designated 'strategic' holdings in some defense-related industries. 55
• 6.2. Market Entry Route 56
  • 6.2.1. Budget Process 56
  • 6.2.2. Procurement Policy and Process 57
  • 6.2.3. Foreign OEMs enter the market through the Government to Government deals 57
  • 6.2.4. EDA promotes defense procurements within the EU 57
• 6.3. Key Challenges 58

7. Competitive Landscape and Strategic Insights 59

• 7.1. Competitive Landscape Overview 59
• 7.2. Key Domestic Companies 61
  • 7.2.1. Danube Aircraft Company: Overview 61
  • 7.2.2. Danube Aircraft Company: Services 61
  • 7.2.3. Danube Aircraft Company: Recent Contract Wins 61
• 7.3. Key Foreign Companies 62
  • 7.3.1. SAAB- Overview 62
  • 7.3.2. SAAB- Major Products and Services 62
  • 7.3.3. SAAB - recent announcements and strategic initiatives 63
  • 7.3.4. SAAB - alliances 64
  • 7.3.5. SAAB - recent contract wins 67
  • 7.3.6. SAAB: Financial Analysis 67
  • 7.3.7. MBDA- overview 69
  • 7.3.8. MBDA - Product Focus 69
  • 7.3.9. MBDA - recent announcements and strategic initiatives 70
  • 7.3.10. MBDA - Alliances 73
  • 7.3.11. MBDA: Recent Contract Wins 74

8. Business Environment and Country Risk 75

• 8.1. Economic Performance 75
  • 8.1.1. GDP per Capita 75
  • 8.1.2. Gross Domestic Product 76
  • 8.1.3. Exports of Goods and Services (LCU Billion) 77
  • 8.1.4. Imports of Goods and Services (LCU Billion) 78
  • 8.1.5. Gross National Disposable Income (US$ Billion) 79
  • 8.1.6. LCU per USD (period average) 80
  • 8.1.7. Market Capitalization of Listed Companies 81
  • 8.1.8. Market Capitalization of listed companies as a % GDP 82
  • 8.1.9. Foreign direct investment, net (BoP, current US$ Billion) 83
  • 8.1.10. Net foreign direct investment as % of GDP 84
  • 8.1.11. Mining, Manufacturing, Utilities Output (LCU Billion) 85

9. Appendix 86

• 9.1. About GlobalData 86