01 Sep 2020
Posted in Aerospace, Defense & Security
No slowdown in South Korea’s defense budget, seeks KRW52.9 trillion for 2021, says GlobalData
Following the news that the Republic of Korea plans to expand its defense budget to KRW52.9 trillion at a rate of 5.5%;
Mathew George, Ph.D., Aerospace & Defense Analyst at GlobalData, a leading data and analytics company, offers his view:
“GlobalData’s report, ‘South Korean Defense Market – Attractiveness, Competitive Landscape and Forecast to 2025’, forecasts that the country’s defense budget would grow at 8.4% to reach KRW53.4 trillion. The present announcement by the Ministry of Defense (MoD) suggests that GlobalData’s estimates were KRW0.5 trillion over the amount requested by the MoD.
“It is interesting to note that the MoD is projecting its growth in relation to last year’s official budget and not its revised budget, which was cut to KRW49.25 trillion from KRW 50.15 trillion. This means that the budget, if approved, will grow at roughly 7% from last year.
“This is not surprising though as Korea’s long-term strategic and domestic requirements need this growth. It is also a prerequisite for the government to continue the development of major programs such as the KDDX, the KF-X program. The government also suggests that this is required as some projects, namely the establishment of a nuclear-WMD response system and transition to OPCON, have entered final stages.
“These programs are not only important for its strategic needs, but in the light of severe effects to its economy, they allow companies to retain talent, improve hiring and continue development and production of technologies that could help the country with exports. Any sign to reduce these support mechanisms could be seen as detrimental to the economy and the survivability of companies along the aerospace and defense supply chain.”