Portugal currently only spends 1.2% of its overall gross domestic product (GDP) on defense, which translates to $3 billion of its overall budget, with little room for acquisitions, found GlobalData a leading data and analytics company. However, the conflict in Ukraine is likely to motivate the country to reassess its defense budget and move one step closer to the NATO target of 2% of GDP.

GlobalData’s latest report ‘Portugal Defense Market Size and Trends, Budget Allocation, Regulations, Key Acquisitions, Competitive Landscape and Forecast, 2022-2027’ reveals that Portuguese defense expenditure is forecast to grow to $3.8 billion by 2027 and the acquisition budget is forecast to reach $0.6 billion.

William Davies, Associate Analyst at GlobalData, comments: “Portugal’s defense budget has increased in recent years, climbing 6.5% over the last five years to reach its current level and is forecast to grow at a slightly slower rate of 4.7% in the next five years. This slow growth will force Portugal to make difficult choices about future acquisitions, especially since a significant amount of its current spending is on personnel with only $0.4 billion currently allocated to acquisitions.”

Portugal has committed to a modernization program in recent years, including plans to acquire KC-390s and Viana Do Castelo-Class OPVs. Following Russia’s invasion of Ukraine, Portugal’s defense minister Helena Carreiras stated that the country needed to significantly modernize its forces in order to enhance its credibility as a security actor.

Davies continues: “Portugal has expressed its strong support for Ukraine during the conflict and has aided in the ongoing supply of equipment throughout – including supplying lethal aid as well as personal protection equipment. The country is forecast to increase its expenditure across a number of sectors in the coming years, including aircraft and naval vessels, which will enable it to better participate in international operations. However, its low acquisitions budget is only forecast to reach a high of $0.6 billion in 2027, which will significantly constrain its military modernization.”