Seven years of growth takes annual global defence spending to nearly $2trn

26 Jan 21

Global defence spending reached $1.93trn in 2020, after rising continuously for the past seven years, but a “noticeable slowdown” could be on the way as governments deal with the fallout of Covid-19.

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French military Shutterstock 635920262

French military. Image © Shutterstock

The analysis, from defence intelligence provider Janes, showed 2020 defence spending was almost $180bn higher than a decade earlier, and growth was accelerating.

However, this acceleration is not expected to continue into 2021, the agency said, as the US and regions reliant on exports of commodities such as oil for their revenue – namely, the Middle East and Russia – cut spending.

“With all regions except Europe, Asia Pacific and Latin America likely to implement real reductions in 2021, total defence spending growth will fall to its lowest rate since 2013, but we’re not expecting an overall contraction,” said Andrew MacDonald, lead analyst at Janes.

“In fact, the worst of the Covid-19 pandemic’s impact on military funding is likely to fall in 2022, when governments may begin to rein in spending.”

MacDonald expects “strong expansion” in Asia to drive global spending in the coming years, even forecasting positive growth in 2022, with the global total now expected to reach £2.23trn by 2030.

“While the pandemic appears likely to stifle the growth in buying power of regions like the Middle East, and further depress Russian funding, the relative decline seen in US budgets as Asia Pacific accounts for an ever-increasing share of the global total remains the big story in military funding, even in the post-Covid world,” he said.

Asia’s share of global defence spending was around 20% in 2010, but by 2028 Janes expects this to have risen to 35%, overtaking North America as the largest region.

In percentage terms, it was Europe whose military spending grew most last year, at 5.6%, although Asia Pacific spending grew similarly in dollar terms.

“Smaller markets are also due to record impressive growth rates in 2021, as Latin American spending rebounds thanks to Brazil’s recovery from sharp cuts imposed last year, and Eastern Europe continues to react to the perceived military threat from Russia,” MacDonald said.

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