Sweden’s defense industry is entering its busiest decade in recent memory. In 2025, the country’s defense spending reached $13.5 billion, a 14.1% increase over 2024, marking the first time Sweden has exceeded NATO’s 2% GDP guideline — coming in at 2.3% of GDP.

This is more than just a budget figure. It signals a clear shift in Sweden’s role on the global stage. The increase follows Sweden’s formal accession to NATO earlier this year, a decision widely seen as a response to Russia’s ongoing war in Ukraine.

Modernization and Industry Impact

The bulk of this new funding is being directed toward modernization programs. Saab, Sweden’s largest defense company, is ramping up production of the Gripen E fighter jet for both domestic and export customers. Its 2024 first-quarter report showed 91% of total sales were defense-related, with strong performance in its Aeronautics and Surveillance divisions.

The Swedish Armed Forces have also announced procurement plans for new Patriot air defense systems, expanded radar and early-warning capabilities, and investments in cyber defense infrastructure. The navy is upgrading its submarine fleet, and the army is accelerating purchases of artillery and armored vehicles.

Looking Ahead

The growth isn’t stopping in 2025. The Swedish government’s 2026 budget bill, presented in September, adds another $2.87 billion (SEK 26.6 billion) to defense — an 18% jump — pushing spending to 2.8% of GDP. If approved, this would represent one of the largest year-over-year increases in Swedish defense history.

Market analysts expect a 6.7% compound annual growth rate (CAGR) for Sweden’s defense market from 2026 to 2030, fueled by multi-year NATO capability targets and a long pipeline of modernization projects.

Opportunities for Industry Players

The spending surge is a boon for aerospace and defense contractors. Saab is already hiring additional engineers for Gripen and radar programs. International firms like Raytheon, BAE Systems, and Thales are competing for contracts in missile defense, communications, and surveillance technology. Maintenance and support providers are also expected to benefit as the Swedish military expands its equipment inventory.

Why It Matters

For Sweden, this isn’t just about budgets — it’s about readiness. The country is building a modern, NATO-integrated defense force. For industry professionals and suppliers, this means years of project opportunities, from advanced fighter programs to cybersecurity solutions.