SecurityWorldMarket

26/12/2017

Global defence spending to reach a high in 2018

London, UK

Global defence expenditure is set to increase again in 2018 to reach its highest level since the end of the Cold War, according to the annual Jane’s Defence Budgets Report released by IHS Markit, a world leader in critical information, analytics and solutions.

According to the Jane’s report, defence spending will grow for the fifth consecutive year, reaching $1.67 trillion in 2018 and overtaking the previous post-Cold War record of $1.63 trillion seen in 2010.

Defence spending will increase by 3.3 percent in 2018 - the fastest rate of growth for a decade - driven by the largest year-on-year increase in US spending since 2008. Funding for the procurement of military equipment is also expected to rise from $295 billion in 2017 to $315 billion in 2018, another record high in global terms.

“The increase in defence spending reflects improving economic conditions around the world, coupled with a response to continuing instability in a number of key regions,” said Fenella McGerty, principal analyst, Jane’s by IHS Markit. “However, defence spending remains lower in relation to GDP than at any time in the last 10 years, which suggests that recent growth primarily relates to improved economic and fiscal conditions in established markets.”

Over the last decade, global defence expenditure has fallen from an average level of 2.7 percent of GDP to 2.2 percent.

The key reason for the expected acceleration in global defence spending growth is the potential 4.7 percent increase to the US budget planned for 2018. With the US Department of Defense’s (DoD) budget accounting for 40 percent of all global defence expenditure, changes in US spending affect trends worldwide. Since the 11 September attacks in 2001, the US has spent around $10 trillion on defence.

“President Trump and his administration sought large increases in the DoD budget in his first budget. The increased funding will go toward fixing readiness and training issues that are largely the result of sequestration cuts,” said Guy Eastman, senior analyst, Jane’s by IHS Markit. “Investment will also increase in targeted areas such as Ballistic Missile Defence (BMD), shipbuilding, missiles and munitions, space-based systems, and C4ISR systems.”


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