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Latvia Defense Market Size and Trends, Budget Allocation, Regulations, Key Acquisitions, Competitive Landscape and Forecast, 2021-2026

The defense budget in Latvia is valued at $762.8 million in 2020. The market is expected to grow at a CAGR of over 6% during the forecast period 2021-2026. Whilst the Latvian defense budget will continue to grow over the forecast period, there will be a significant amount of spending dedicated to acquisitions to ensure that the military can continue to fulfill key functions and work with NATO allies. This is because Latvia is heavily reliant on allies, including NATO for ongoing security. Expenditure in the forecast period is focused on sectors including infrastructure and systems, including missile defense systems and radar. The larger acquisitions budget will enable major acquisitions, and the largest portion of the equipment budget is being spent on programs including Black Hawks and military UGVs.

Overview of the defense market in Latvia

Overview of the defense market in Latvia

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Military doctrine, modernization goals, and Latvia’s national defense strategy

In 2020, Latvia published its official defense strategy, which details the defense priorities of the nation and the methods of achieving those objectives. This document details the primary state defense objectives as preventing external and internal threats to national security. The document outlines regional security trends, including how Russia’s ‘provocative’ behavior, as well as its aggressive military, has worsened the situation. The report highlights the annexation of Crimea in 2014 in particular as a source of this deterioration. It is explained that Russian state-controlled media portrays a negative image of Latvia, and opinion polls within Russia indicate that its citizens view Latvia as a regional adversary.

The role of the national armed forces is broken down into a number of categories, these include its function as an early warning system designed to minimize the risk of unexpected attacks, as well as the development of C4ISR systems that provide battlefield situational awareness. They will also fulfill traditional roles, including rapid response and combat readiness roles – these require frequent training operations, as well as expenses on infrastructure.

How has COVID-19 affected defense spending in Latvia?

The pandemic caused Latvia’s GDP growth to contract by over 3%. Considering that the country is relatively small, with total GDP of $29.3 million in 2020, the pandemic will further increase Latvia’s overall budgetary constraints. Whilst GlobalData predicts that Latvia should recover economically in the coming years, with GDP predicted to increase by almost 4% in the next five-year period, the pandemic still has the potential to stall Latvia’s military procurement. The crisis may also cause ongoing supply chain issues, which could affect ongoing procurement.

What are the segment classifications in Latvia’s defense market?

Latvia’s defense market is segmented into infrastructure construction, utility helicopter, anti-tank guided missile (ATGM), and others. Infrastructure construction is the largest segment in the defense market in Latvia followed by utility helicopter, anti-tank guided missile (ATGM).

Defense market in Latvia, by segment

Defense market in Latvia, by segment

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What are the import and export market dynamics in Latvia’s defense market?

Because of its relatively small size, Latvia does not export any defense products. Its main import source is the US, amounting to over 50% of the total imports over the historic period. Additionally, the country has procured stinger missiles from Denmark, as well as M109 self-propelled artillery pieces from Austria. A significant part of its defense imports was the acquisition of sensors; this is part of Latvia’s drive to increase situational awareness and provide allies with the advanced capabilities to react to potential territory incursions. US imports make up such a large amount of market share because of funding for the country’s Black Hawk procurements, the first of which is due to be delivered in 2021. The two countries signed a procurement agreement in 2017, agreeing that there will potentially be the integration of Latvian companies in the US defense supply chain and increasing the ease of US exports to Latvia.

Who are the major market players in the defense market in Latvia?

Major market players in the defense market in Latvia include Lockheed Martin Corp., Rafael Advanced Defense Systems, and Milrem.

Defense market in Latvia, by key players

Defense market in Latvia, by key players

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Market report scope

Market size (Year – 2020) $762.8 million
Growth Rate CAGR of >6% from 2021 to 2026
Base year 2020
Forecast Period 2021-2026
Segmentation Infrastructure Construction, Utility Helicopter, Anti-Tank Guided Missile (ATGM), and others
Key players Lockheed Martin Corp., Rafael Advanced Defense Systems, and Milrem.

This report provides a comprehensive analysis of the defense market in Latvia and contains an in-depth analysis of the following:

  • Key sections include political alliances and political threat perceptions as well as detailing market attractiveness and emerging opportunities.
  • In particular this report identifies budgetary trends over the next 5 years to 2026, outlining predicted expenditure as well as expected costs.
  • This report of part of our network of country research reports.

Reasons to Buy

  • Determine potential investment opportunities based on analysis and market projections.
  • Gain an understanding of the Latvian defense market and potential limitations to involvement.
  • Understanding of how spending will change in the next 5 years and the impact of COVID-19.

Key Players







Lockheed Martin Corp

Rafael Advanced Defense Systems


Table of Contents

Table of Contents

Executive Summary

Defense Budget Assessment

Budgeting Process

Defense Market Size Historical And Forecast

Drivers Of Defense Expenditure

Analysis Of Defense Budget Allocation

Military Doctrine And Security Environment

Military Doctrine And Strategy

Primary Threat Perception

Secondary Threats

External Threats

Political And Strategic Alliances

Market Entry Strategy And Regulations

Procurement Policy And Process

Market Regulations

Key Challenges

Major M&A, Financing and Partnerships of Latvia Defense Market

Market Attractiveness And Emerging Opportunities

Market Attractiveness, 2021 20256

Top Defense Segments By Value

Import And Export Market Dynamics

Import Market Dynamics

Defense Platform Acquisitions

Defense Platform Acquisitions By Value

Black Hawks


Fleet Size

Competitive Landscape

Defense Companies Operating In Latvia

Main Defense Companies


About This Report

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Frequently Asked Questions

The defense budget in Latvia is valued at $762.8 million in 2020.

Latvia’s defense expenditure is expected to register a CAGR of more than 6% during the forecast period 2021-2026.

In 2020, Latvia’s defense budget as a percentage of GDP is 2.3%.

Military infrastructure and logistics is the largest sector in Latvia’s defense market.

Leading companies in the defense market in Latvia include Lockheed Martin Corp., Rafael Advanced Defense Systems, and Milrem.


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