Despite global economic downturn, Norway is expected to keep increasing its defense budget over the next five years, according to GlobalData. The leading data and analytics company notes that this is needed to ensure the stability of the High North, a shift from the country’s traditional focus on the Russian border.

Vera Lin, Aerospace and Defense Analyst at GlobalData, comments: “The Arctic States, including Norway, have sought to characterize the region as one of low tension since the end of the Cold War. Norway’s armed forces have traditionally geared up to counter a possible Russian invasion across its borders, but Russia has adapted to grey-zone activities by mounting hybrid warfare threats using cyberattacks, electronic warfare and jamming GPS systems. This has given Norway scope to increase focus on the High North region, which is a geopolitically important region, rich in natural resources that encompasses key shipping routes such as the Northern Sea Route and the Northwest Passage.”

GlobalData’s latest report, ‘Norway Defense Market – Attractiveness, Competitive Landscape and Forecasts to 2026’, projects Norway’s defense spending will grow at a compound annual growth rate (CAGR) of 4.56% to reach $9.3bn in 2026. This budget will allow the country to modernize its armed forces through personnel development; provide ongoing investment in F-35A, AW-101 and NH-90 NFH programmes; allow the future acquisition of the Type 212 CD Submarine; and develop military cooperation for a stable security environment in the Arctic.

Lin continues: “Norway is implementing an active defense strategy to maintain stability and predictability in the Arctic region, increasing investment in submarines with extended endurance from the hybrid diesel engine and fuel cell-based air independent propulsion system. The submarines will also be fitted with Kongsberg’s Naval Strike Missile, sea skimming precision-missiles capable of striking targets at over 100 nautical miles.”

According to the GlobalData ADS Intelligence Center, the 2021 Norwegian defense budget has increased from $6.2bn in 2017 to $7.2bn in 2021, a 3.79% compound annual growth rate (CAGR) over the historic period. The Norwegian defense budget is forecast to follow an increasing trend until 2026, as Norway implements service-wide modernization to meet its strategic policy goals in the High North. Increased spending is attributed to not only new platform acquisitions, but also in expanding military and civilian personnel to ensure combat-readiness of the Armed Forces.

Lin continues: “Norway is focusing on its role in NATO’s Northern Flank, by conducting air policing operations in the High North region and maritime surveillance in the Barents Sea and the Norwegian Sea. Military spending is steadily increasing to maintain a balance in security in the region, in line with Norway’s commitment to reach the NATO spending goal of 2% of GDP by 2028 in the Long-Term Defense Plan.

“Norway is also participating in a push for a more integrated European defense framework, through EU military cooperation agreements such as the EU project on military mobility and through bilateral relationships, such as the Norway-Germany defense cooperation for the delivery of Type 212 CD submarines. An alignment between EU-NATO security coordination would theoretically streamline security structures, although Norway seems to be prioritizing its role in NATO.”