In response to rising threat perceptions, global defence spending rose to USD2.46 trillion in 2024. Countries in Asia, the Middle East and North Africa, and Europe saw major budget increases, although President Trump’s recent call for a minimum spend of 5% of GDP among NATO members remains unfeasible for most countries.
In 2024, global defence spending reflected intensifying security challenges and reached USD2.46 trillion, up from USD2.24trn the previous year. Growth also accelerated, with the 7.4% real-terms uplift outpacing increases of 6.5% in 2023 and 3.5% in 2022. As a result, in 2024, global defence spending increased to an average of 1.9% of GDP, up from 1.6% in 2022 and 1.8% in 2023.
Increases were driven by deteriorating security environments and sharpened threat perceptions, particularly in Europe and the Middle East and North Africa (MENA), which both saw major increases, as did some key Asian countries. Moreover, easing inflation allowed many countries to invest in new capabilities rather than just covering higher operating costs and wages. The only region that did not see real-terms increases was Sub-Saharan Africa, where defence spending declined by 3.7%.
Europe, NATO and Russia
Over the last year, European defence spending jumped by 11.7% in real terms to reach USD457 billion, with 2024 marking the tenth consecutive year of growth. Indeed, Russia’s 2014 invasion of Crimea elevated threat perceptions across the continent and rejuvenated long-standing commitments from NATO members to spend 2% of GDP on defence. Regional growth in 2024 was dominated by the 23.2% real uplift in the German defence budget; however, future defence-budget growth there is uncertain following the collapse of the ruling ‘traffic light’ coalition in November 2024 and the upcoming election.
Defence budgets in other countries also grew significantly, such as in Poland, which became the 15th largest defence spender globally in 2024, up from 20th place in 2022. Nonetheless, European growth remained outpaced by uplifts in Russia’s total military expenditure, which grew by 41.9% in real terms to reach an estimated RUB13.1trn (USD145.9bn).
In light of lower domestic input costs and the dominance of domestic production in Russia, it is useful to examine military spending in purchasing power parity (PPP) terms. In purchasing power parity (PPP), Russian total military expenditure reached I$462bn in 2024, exceeding the total for Europe in USD at market exchange rates (MER). The prevalence of US defence materiel in European defence procurement makes conversions to PPP unsuitable. The higher PPP figure explains why Russia is able to fund more extensive military capabilities than MER-based estimates of Russian defence spending would indicate. Furthermore, this is the PPP conversion of total estimable military expenditure in Russia – it does not include the unquantifiable wider defence spending burden that has spread to regional governments, industry and families of personnel. Nonetheless, estimable Russian spending in 2024 still represented the equivalent of 6.7% of GDP – more than double the levels in the years prior to its 2022 full-scale invasion of Ukraine. Such spending and associated fiscal pressures are likely to continue into 2025, with identifiable defence spending estimated to reach 7.5% of GDP.
Conversely, growth in US defence spending in 2024 remained constrained by the Fiscal Responsibility Act of 2023. The overall impact of Donald Trump’s return to the presidency on the US defence budget is still ambiguous in light of the influence of fiscal hawks within the Republican Party as well as any potential reductions in overseas commitments. Beyond the US, Trump’s re-election intensifies the pressure on Europe’s NATO members to raise their defence spending. In January, Trump said that the minimum level of expenditure for NATO members should increase to 5% of GDP. If European NATO members maintained the 2024 rate of growth, then defence spending would reach an average 3% of GDP within five years and 5% within ten. However, maintaining the elevated 2024 rate of growth is likely unfeasible for most countries. Indeed, uplifts in 2025 are not projected to be as high based on budgets that have been approved so far. Further growth will depend on any renewed commitments made at the 2025 NATO summit in the Hague. Beyond the public pressure Trump – and indeed other NATO allies – exert to increase spending, Europe’s leaders may also be contemplating how to respond to the potentially weakened US commitments to regional security.
The focus on the over-simplified percent-of-GDP metric, however, remains a concern. It masks actual capabilities, contributions, sustainability and effectiveness of spending while also incentivising states to adopt broader definitions of defence spending. Many countries are already using off-budget supplementary funding instruments to bolster spending.
Figure 2: Defence budget for current NATO members, 2008–24 (USDbn, current)
- ►1.1Defence budget(USDbn, current)
- ►1.2Defence budget(USDbn, constant 2015)
- ►Show for current NATO members
- ►Show for NATO members at the time
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Source: The Military Balance+
Widespread growth
Asian defence budgets continued to grow at a moderate pace in 2024, consistent with their trajectory over the last decade. This continuity comes as strategic drivers – such as China’s military modernisation and increasing assertiveness, and North Korea’s advancing nuclear weapons programme – galvanise threat perceptions in the region. This has resulted in significant spending increases in the region’s larger, more mature economies, such as Japan. China’s defence budget grew by 7.4% in real terms, outpacing the 3.9% average rate for the rest of the region despite significant uplifts in Japan and Indonesia. However, stronger uplifts in other regions meant that Asia’s regional share of global spending fell to 21.7% in 2024 from 25.9% in 2021.
Spending in the MENA region surged after 2021 and accelerated even further in 2024 as the Israel–Hamas war intensified and spread. Growth in real terms strengthened, reaching nearly 10% in 2024, driven by a 72.9% real-terms surge in Israeli spending and growth in markets like Algeria.
The war in Gaza and wider regional instability also drove an increase in defence spending as a percentage of GDP, with the regional average rising to 4.3% in 2024, up from 4.0% in 2023. This average masks the fact that the region is home to some of the largest spenders as a proportion of GDP. This includes Algeria, which now spends 8.2% of GDP on defence – second only to Ukraine globally – as well as Israel and Saudi Arabia, which spend 6.4% and 6.5%, respectively. Whether spending growth will remain elevated or revert to prior trend levels will hinge on the success of the January 2025 Israel–Hamas ceasefire arrangements and the security situation in the wider region.
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The exceptions
In Latin America and the Caribbean, trackable defence spending reached USD59.5bn, representing a real terms increase of 4.1%. Despite this uplift, regional budgets are yet to recover from COVID-19 pandemic-related cuts, with growth remaining subdued against lingering financial pressures and low threat perceptions.
Regional plans to modernise and increase national production capabilities continued, though notably, after seven years of near-continuous real-terms cuts, Argentina’s defence spending began to stabilise and new investments materialised. In September 2024, the country received the first of the four P-3C Orion maritime patrol aircraft from Norway. Additionally, in April 2024, Argentina signed a USD300 million contract for 24 second-hand F-16s (Block 10/15) from Denmark.
In Sub-Saharan Africa, growth continued to be hampered by high inflation rates and severe currency depreciations, with regional defence budgets falling by 3.7% in real terms. A decrease in the budgets of key actors, such as Nigeria, was made more acute as falls coincided with large budget increases in Burkina Faso, Mali and Niger – members of the Alliance of Sahel States – which are seeking to redefine regional security. In dollar terms, while Nigeria’s defence budget fell by over 50%, Burkina Faso, Mali and Niger increased their budgets by 23.6%, 13.4% and 32.3%, respectively.
Outlook
The main concerns in Europe remain the sustainability of recent increases, the feasibility of any further increases in light of President Trump’s desire to see spending rise, and the potential for weakened US defence commitments.
Globally, budgetary revisions are becoming increasingly common and more dramatic than in past annual budget cycles, with additional funding to address emerging security threats enacted over the course of the year. While this is a strong indicator of countries’ levels of concern, such measures also create volatility and a lack of transparency. This growth in spending, coupled with strategic and political pressure to continue increases for defence, comes at a time of high fiscal pressures, including mitigating climate change and responding to demographic shifts.