Swedish defence exports surge as global demand rises

Sweden ranks among the world’s largest arms exporters per capita, thanks to a long tradition of independent defence production. In 2025, Swedish defence exports reached just over SEK 28 billion, compared to a record SEK 29 billion in 2024.

The United States was the largest destination during the year, receiving grenade launchers and tracked vehicles, with sales of fighter jets to Hungary and Brazil in second and third place. The strong export performance is also reflected at EKN, where the defence sector grew to become the single largest industry in the guarantee portfolio in 2025, accounting for around 40 percent of total exposure.

A growing number of new applications, combined with several major transactions currently in the pipeline, suggest that the sector will continue to increase in importance for EKN. The nature of defence contracts also contributes to this development.

“Defence contracts often come with long delivery schedules because of the complexity of the products as well as long repayment periods due to the significant amounts,” says Oscar Sundström, Senior Underwriter at EKN. “One example is the sale of fighter jets to Brazil in 2014, valued at SEK 39 billion.”

Long-term financing supports major defence contracts

Although defence purchases are typically financed through national budgets, export credit solutions can play an important role in facilitating large and long-term transactions.

ECA-backed financing supported by EKN’s highest possible credit standing and complemented by funding from SEK, itself highly rated, creates an attractive financing structure for buyers.

“Long tenors at a fixed CIRR interest rate offered by SEK, combined with triple-A cover from EKN, create a highly attractive financing solution,” Sundström explains.

“The amortisation schedule provides predictability, as future repayments are known in advance. In many cases the financing terms are more favourable than what some countries could obtain on the capital markets themselves.”

The structure can also be tailored to match the commercial terms of a specific transaction, making it easier for buyers to plan large defence investments.

A growing ecosystem of Swedish defence companies

Sweden’s defence industry has long been recognised for its technological excellence. Today, the sector comprises an ecosystem of around 380 companies.

Approximately 80 of these companies export advanced defence systems, ranging from munitions and combat vehicles to naval systems, surveillance technology and specialised software.

To further reinforce the sector, the Swedish government adopted a new Defence Industry Strategy in 2025, setting out a long-term framework to enhance competitiveness and strengthen Sweden’s overall defence capability.

Dual-use innovation creates new opportunities

A growing trend in the sector is the development of dual-use technologies – products that can be used for both civilian and military purposes. This trend opens the door for startups and smaller technology companies that need access to larger markets before they can achieve commercial scale.

The high-level decision-making involved in defence procurement also highlights the role of Team Sweden, which includes EKN, SEK, Business Sweden and Swedish embassies around the world.

“To buyers, the involvement of Team Sweden and the commitment of the Swedish government add integrity, transparency and long-term cooperation to the transaction,” says Sundström.

Sweden also maintains a strict export control framework. The Inspectorate of Strategic Products (ISP) oversees exports of military equipment and dual-use items, ensuring that recipients comply with Sweden’s obligations under international law and its human rights commitments.

Small-scale weapons production in Sweden dates back to the country’s era as a major military power in the 17th century, when manufacturing centred mainly on muskets and cannons. It was not until the 20th century that the sector expanded significantly, driven by rapid industrialisation and ongoing security concerns, both before and throughout the Cold War. Maintaining a domestic defence industry became an important part of Sweden’s comprehensive total defence strategy. Over time, well-known companies such as Bofors (today part of BAE Systems) and Saab emerged, producing a wide range of equipment including aircraft, naval vessels, artillery and radar systems.