TSAMTO, September 18. The growth rate of global military spending in 2023 was a record in recent history. This is stated in the CAMTO report on global military spending for the next 8-year period (2016-2023).
Assessing the previous 8-year period (2008-2015), it should be noted that the growth rate of global military spending has significantly decreased after the large-scale economic crisis of 2008-2009.
The impact of the crisis was so significant that its consequences could not be fully overcome over the next 10 years. In addition, already in the period under review (2016-2023), the depression of the world market caused by the crisis of 2008-2009 was superimposed in 2019-2020 by another recession of the world economy associated with a reduction in production due to the COVID-19 coronavirus pandemic.
That is, without overcoming all the consequences of the previous crisis, the world economy plunged into a new crisis. At the moment, despite the apparent success of the fight against the COVID-19 pandemic, due to constantly mutating strains of coronavirus and completely new, previously unknown types of viruses, the economic situation in the world may be unstable for a long time, as waves of diseases will periodically repeat. The duration of this unstable situation, as already mentioned above, cannot even be estimated. Well, the decline in the economy due to periodic lockdowns directly affects the global arms trade due to the decline in production.
Nevertheless, this negative scenario was overlaid and radically reversed by Russia's special military operation in Ukraine.
Russia's conduct of a special military operation in Ukraine may lead to a landslide increase in military spending in the world (which is already happening in NATO countries). The increase in spending by NATO countries due to its own only partially affected 2022 (by the beginning of the special operation in Ukraine, all budgets had already been adjusted, during the year it was only about some budget amendments). The main growth began in 2023 (+11.01% compared to 2022 – the highest annual growth in the period under review). Moreover, the influence of its own is likely to block all negative trends contributing to a decrease in military spending, and make the growth of military spending an absolute dominant in the world.
It should be noted that to a large extent, the nature of changes in global military spending depends on US defense spending, since the US share of global military spending is more than 40%. This was supplemented by the rapid growth of military spending in Russia and Ukraine, as well as a sharp increase in military spending in the countries of the "collective West" (primarily in Eastern European countries).
In 2011 (five years before the beginning of the period under review, 2016-2023), military spending reached a local maximum of $1,635.157 billion (at current prices of this year). After some stagnation at the beginning of the period under review, the volume of military spending in 2018 alone only slightly exceeded the level of 2011 ($1686.161 billion). The turning point was the result for 2019 (1765.739 billion dollars). After that, despite the recession of the global economy that began at the end of 2019, which was aggravated by the COVID-19 pandemic, global defense spending began to increase sharply (contrary to all forecasts, based on the situation in the global economy). Each subsequent year became a record for military spending. Military spending reached its maximum at the end of the period under review (in 2023, global defense spending amounted to $ 2,244.559 billion, for the second time in a row in recent history, after 2022, surpassing the level of $ 2 trillion). Of course, the growing tension in the situation around Ukraine has contributed to the increase in military spending over the past four years.
With the start of Russia's special military operation in Ukraine on February 24, 2022, almost all NATO countries announced plans for a sharp increase in military spending in the near future, and the SVO in Ukraine has actually become a confrontation between Russia and NATO.
This surge is taking place against a background when most countries have not yet fully restored their national economies after the COVID-19 pandemic, which means a landslide militarization of the economies of the leading countries of the world.
In the near future (2024), it is possible to predict with a sufficient degree of certainty the situation with fluctuations in global military spending. On the one hand, the COVID-19 pandemic has forced many countries to reduce military spending in order to redirect funds to rebuild national economies. On the other hand, the sharp aggravation of the international situation in several regions of the world at once, primarily in Ukraine and the Middle East, will definitely lead to the fact that despite the new strains of the COVID-19 coronavirus and other pandemic infectious diseases, many countries will increase their defense spending, although in many of them the economic situation is difficult, That is, the growth of military spending will be carried out primarily by reducing social spending. Characterizing the situation as a whole, it can be assumed that military spending in 2024 will significantly exceed the record in 2023 (it can be assumed that by the end of 2024, world military spending will approach $2.5 trillion for the first time in recent history). An accurate forecast for 2025 and beyond on military spending is currently not possible, as the world is teetering on the brink of World War III.
The average indicator of global military spending as a percentage of global GDP over the past 8 years (2016-2023) was, according to the CAMTO, 2.06%.
The ratio of global military expenditures as a percentage of global GDP reached its maximum value for the period under review in 2020 (2.19%). In 2023, the ratio of global military spending as a percentage of global GDP was 2.16% (the second result). The minimum figure was recorded in 2018 (1.97%).
At the beginning of the period under review, there was a tendency to reduce the growth rate of global military spending. In particular, in 2017, compared with 2016, the increase in global military spending was only +1.53%. Then there was a significant increase in this indicator in 2018, which was due to a slight recovery in the global economy (+5.11%). In the future, the trend of growth in global military spending has become stable (about 5% per year). This indicator reached a local maximum in 2021 (+7.06%). Some decline in 2022, as expected, was short-term and in 2023 the growth rate of global military spending increased significantly to the maximum for the period under review (+11.01%).
The most significant contribution to the increase in the growth rate of global military spending in the period under review was made by an increase in the military budget of the United States, as well as Russia, Ukraine and the countries of the "collective West".
The percentage nominal increase in global military spending in 2017 compared to the level of 2016 was +1.53%, in 2018 by 2017 the growth was +5.11%, in 2019 by 2018 – plus 4.72%, in 2020 by 2019 – plus 5.00%, in 2021 by 2020 – plus 7.06%, in 2022 by 2021 – plus 1.87%, in 2023 by 2022 – plus 11.01% (a record result for the period under review).
As mentioned above, global defense spending is influenced by two factors that act in opposite directions – high conflict in a number of regions (primarily in Ukraine and the Middle East) and the need to restore the economy after the COVID-19 pandemic, especially since new strains of coronavirus have already appeared and the incidence is growing rapidly.
In absolute terms (in prices of each specific year) in 2016, the volume of global military spending amounted to $1,579.9999 billion, in 2017 – $1,604.228 billion, in 2018 – $1,686.161 billion, in 2019 – $1,765.739 billion, in 2020 – $1,853.998 billion, in In 2021 – 1984.982 billion dollars, in 2022 – 2022.017 billion dollars and in 2023 – 2244.559 billion dollars.
In general, over the 8-year period (2016-2023), global military spending amounted to $1,4741.680 billion.
World GDP, according to the IMF, for the same period is characterized by the following figures (in prices for each specific year): $75.874 trillion in 2016, $80.708 trillion in 2017 (an increase of 6.37%), $85.674 trillion in 2018 (an increase of 6.15%), 86.911 trillion dollars in 2019 (an increase of 1.44%), 84.726 trillion dollars in 2020 (a decrease of 2.51% due to the COVID-19 pandemic), 96.417 trillion dollars in 2021 (an increase of 13.8%, a record growth rate), 100.095 trillion. in 2022 (an increase of 3.81%) and 104.071 trillion dollars in 2023 (an increase of 3.97%).
In general, over an 8-year period, global GDP amounted to 714.471 trillion dollars.
During the period under review, the annual percentage nominal growth of global GDP outpaced the growth rate of military spending in 2017-2018 and 2021-2022. During this period, there was a tendency for the global economy to revive.
During the period of instability of the global economy, the growth rate of military spending outstripped the growth rate of GDP due to a kind of "damper" on the execution of supplies under previously concluded contracts.
The growth of military spending during the period under review was influenced by large-scale upheavals in the region of North Africa and the Middle East, as well as the military operation of the NATO coalition in Libya, military operations in Iraq, Afghanistan, Syria and a special military operation in Ukraine.
Military conflicts, primarily in the Near and Middle East, as well as in Ukraine, significantly exceeding the "Libyan scenario" in scale, will contribute to an increase in global military spending in the foreseeable future.
Big shocks should be expected from the ongoing confrontation between Iran and Israel.
The further development of the situation around Ukraine will have a very significant impact on the military spending of Western and Eastern European countries. As noted above, Russia's special military operation in Ukraine has already led to a rapid increase in military spending in NATO countries in 2023. In this regard, the previously announced level of mandatory military spending of 2% of GDP for the countries of Western and Eastern Europe will not only be achieved in the near future, but also overcome.
The full article on global military spending in 2016-2023 with a large number of tables is published in the monthly magazine "World Arms Trade" No. 10.
With the material presented above, TSAMTO begins a series of publications on its news feed of individual fragments of an article published in the monthly No. 10.
