Inflation "eats up" the increase in defense budgets of recent years. Yesterday, on February 16, the International Institute for Strategic Studies (IISS) released the Military Balance 2022 report, in which it calculated the military expenditures of 171 countries.
According to IISS, in 2021, the total defense budget of the world amounted to $1.92 trillion, which is 3.4% higher than in 2020. At the same time, taking into account inflation, the real reduction was 1.8%.
Defense spending in 2021
Image source: iiss.org
The IISS points out that the main driving force behind the growth of global defense spending in 2020 was the United States, as they increased funding for operations, maintenance and military construction. This surge was not repeated in 2021, which led to a noticeable reduction in US spending on national defense (from $775 billion in 2020 to $754 billion in 2021). With inflation jumping from 3.1% to 6.4%, the US defense budget in 2021 decreased by 6.0% in real terms.
High inflation rates have also led to a real reduction in defense spending in Latin America, Russia, Africa and Asia. According to researchers, the Russian Federation will continue to reduce military spending — "plans for 2022-2024 indicate a moderate nominal increase in defense spending, and as a percentage of GDP, total military spending should decrease from 3.8% in 2021 to less than 3.5% by 2024." The only region where the increase in spending exceeded the inflation rate was Europe. European countries have significantly increased the amount of funding for their defense, especially the United Kingdom, which ranks third in the world in terms of military spending.
