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World—Record global military spending supports defence exports
An increasingly complex geostrategic environment and conflicts in Europe and the Middle East saw global military expenditure rise for a tenth consecutive year to a record US$2.7 trillion in 2024, according to the Stockholm International Peace Research Institute (SIPRI). Spending rose 9.4% in real terms from 2023 levels, the largest increase since 2009.
The US remained the largest spender in 2024 at US$997 billion, a real increase of 5.7% y/y (Chart), followed by China at approximately US$314 billion with 7% growth. India is now the fifth largest spender (after Russia and Germany) at US$86 billion in 2024, accounting for 7.6% of total government expenditure. Several key export partners recorded substantial real growth, including the Netherlands (35%), Sweden (34%), Germany (28%) and Japan (21%). Southeast Asian nations continued a steady growth trajectory—Singapore, Malaysia, Philippines, Indonesia and Thailand reported a combined US$42 billion, which would rank 13th globally if treated as a country.
Despite strain on government finances, geopolitical risk is expected to see global defence expenditure continue to rise. For instance, a 12% nominal increase in the US defence budget is being considered by Congress, with increased purchases of equipment flagged. Japan is steadily progressing toward its commitment to spend 2% of GDP on defence by 2027, and the Republic of Korea’s defence budget has rebounded to 2.6% of GDP as threats from North Korea grow. India announced a 9.5% increase to defence expenditure in FY2026 amid multiple security challenges, including border tensions with China and Pakistan. European defence budgets will continue growing with conflict in the region reinvigorating NATO commitments to spend 2% of GDP on defence and debt limits lifting in Germany. While higher expenditures will present new defence export opportunities, the rapidly evolving geostrategic environment could see fast changing government priorities.
