Spending within Kazakhstan's defence industry has been forecast to increase at a compound annual growth rate (CAGR) of 8.13% over the next five years, to increase from a total of $2.7 billion in 2014 to reach $3.7 billion by 2018.
However, as a percentage of GDP, defence expenditure is forecast to drop from 1.2% in 2014 to 1.1% in 2018.
The threats of attack from domestic terrorist groups have triggered increased expenditure on counter-terrorism and counter-insurgency efforts. Another major factor driving the country's future defence expenditure is Kazakhstan's efforts to upgrade military equipment acquired from the Soviet Union in the past.
Kazakhstan's inventory of artillery and ammunitions was inherited from the Soviet Union after it was dissolved in 1991.
These Soviet-made command, control, communications, and intelligence systems, coupled with aged vehicles and machinery, severely limits Kazakhstan's armed forces' capabilities and requires significant upgrading and replacement.
However, the country was unable to opt for an equipment modernization program in the 1990s and early 2000s owing to inadequate funding.
With a steady increase in its defence budget in the last couple of years, the country is expected to spend a considerable amount on military modernisation.
The expenditure will be directed towards the introduction of automated command and control (C2) systems within the military, upgrading military equipment, enhancing air and missile defence systems, modernising its arms and ammunitions inventory, intensifying the combat training of soldiers and setting up advanced military infrastructure.
To deal with terrorist threats, the Kazakh government has introduced a number of amendments in the counter-terrorism law, whereby a Counter-terrorism Center and Counter-terrorism Commission will be set up over the next few months to prevent propaganda of radical Islamism within the public.
For more information on Kazakhstan's defence industry, see the latest research: Kazakhstan's Defence Industry
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