Switzerland could prove to be a profitable market over the next decade for foreign defense companies such as Lockheed Martin, Saab and Elbit Systems, as the country’s steadily growing defense budget allocates more funds to acquire defense capability on the international market, says GlobalData, a leading data and analytics company.

GlobalData’s latest report, ‘Switzerland Defense Market Size and Trends, Budget Allocation, Regulations, Key Acquisitions, Competitive Landscape and Forecast, 2022-2027’, reveals that Switzerland’s defense budget is forecast to grow from $9.44 billion in 2022 to $10.35 billion in 2027, with funding split between acquisitions, operations and other ancillary costs including training, pensions, intelligence activities and miscellaneous services.

The budget allocation for acquisitions has continued to grow, rising from $1.5 billion in 2018 to reach $2.2 billion in 2022 and GlobalData forecasts that it will reach $2.6 billion by 2027.

Tristan Sauer, Land Domain Analyst at GlobalData, comments: “While this increase is primarily due to the Air2030 program, other acquisitions such as the purchase of six Hermes 900 Medium Altitude Long Endurance (MALE) unmanned aerial systems from Israeli firm Elbit Systems under the ADS 15 program illustrate the diversification of the Swiss military’s modernization initiatives.”

Over the forecast period, the main drivers of Swiss defense expenditure will be the need to modernize its air defense forces in order to ensure the continued defense of its territory from external threats. The Air2030 program will provide Switzerland with 5th generation fighter jets capable of responding to advanced threats in Swiss airspace. Despite Switzerland’s position of neutrality, long term cost efficiency coupled with mounting concerns over the deterioration of European security provide ample justification for the procurement of advanced platforms to equip their air defense fleets.

Sauer continues: “While NATO members have been under increasing pressure to spend 2% of their gross domestic product (GDP) on defense, with Germany announcing in February that it will drastically increase defense spending under the new Chancellor Olaf Scholz, Switzerland has no official requirement to meet that threshold. According to GlobalData, Swiss defense spending was at 1.29% of GDP in 2022 and will increase to 1.31% by 2027.”

Swiss policymakers have also demonstrated an interest in expanding the military’s cybersecurity capabilities, with plans to spend billions of dollars to enhance facilities and train an additional 7,000 soldiers over the coming years.

Interoperability, connectivity and modularity are key to most of the Swiss military’s ongoing procurement programs, with new platforms and systems like the F-35A fighters, Eagle V 6×6 Recon vehicles and Parrot ANAFI drones each possessing the advanced data networking solutions to facilitate combined arms operations.

Sauer adds: “The Swiss military appears to be in the early stages of a slow paced yet comprehensive capabilities overhaul, as the increasingly networked nature of modern warfare has driven concerns about the vulnerability of the Swiss military and civilian infrastructure to hostile actions in both the physical and cyber domains.”