Rise in global defence spending
Increasing tension and uncertainty in the strategic environment and the changing nature of alliances and global conflict has been characterised
by some (for example, Poland’s Prime Minister and the UK’s former Defence Secretary) as a
‘pre-war’ era that has triggered a rapid and significant increase in national
defence spending worldwide.
According to the International Institute for Strategic Studies (IISS), global defence spending in 2024 rose to US$2.46 trillion. Table 1 shows
the rise in spending over the last 3 years, with all regions, except
Sub-Saharan Africa, growing in real terms throughout 2024.
Table 1 Global defence spending over the last 3 years
|
Global defence
spending (US$) |
Real growth (%) |
Proportion of
GDP (average %) |
2024 |
2.46 trillion |
7.4 |
1.94 |
2023 |
2.24 trillion |
6.5 |
1.80 |
2022 |
2.0 trillion |
3.5 |
1.59 |
Source: IISS, The
Military Balance 2025: Defence Spending and Procurement Trends, 12
February 2025.
The Stockholm
International Peace and Research Institute (SIPRI) has calculated a 37%
global increase in military spending over the last decade, with the single
largest increase since the end of the Cold War occurring in 2024. This record
may be exceeded in 2025 with increased spending expected in:
The top
5 highest-spending countries in 2024 accounted for 60% of the world’s total
defence spending. Table 2 shows the expenditure of the top 15 countries.
Table 2 Top
15 countries by military expenditure
Country |
2024 rank |
2023 rank |
Spending (US$b)
in 2024 |
Spending as a
share of GDP in 2024 (%) |
United
States |
1 |
1 |
997 |
3.4 |
China |
2 |
2 |
314 (estimated) |
1.7
(estimated) |
Russia |
3 |
3 |
149
(estimated) |
7.1
(estimated) |
Germany |
4 |
7 |
88.5 |
1.9 |
India |
5 |
4 |
86.1 |
2.3 |
United
Kingdom |
6 |
6 |
81.8 |
2.3 |
Saudi Arabia |
7 |
5 |
80.3
(estimated) |
7.3
(estimated) |
Ukraine |
8 |
8 |
64.7 |
34 |
France |
9 |
9 |
64.7 |
2.1 |
Japan |
10 |
10 |
55.3 |
1.4 |
South Korea |
11 |
11 |
47.6 |
2.6 |
Israel |
12 |
14 |
46.5 |
8.8 |
Poland |
13 |
16 |
38.0 |
4.2 |
Italy |
14 |
12 |
38.0 |
1.6 |
Australia |
15 |
13 |
33.8 |
1.9 |
Total top 15 countries |
2,185 |
|
Total estimated global expenditure |
2,718 |
|
Source: SIPRI, Trends in World Military Expenditure,
2024, fact sheet, April 2025. All spending
figures are in 2024 current US dollars.
Defence spending as a percentage of GDP
Defence spending
as a percentage of GDP is often used as a measure of government policy on
defence. However, economic
fluctuations can distort the figure because changes in GDP cause a perceived
increase in defence funding when there is a downturn in the economy and
decreased defence funding when the economy is growing. For this reason, the
Australian Government’s 2020 Defence strategic update abandoned this measure, stating,
‘the Defence Budget has been decoupled from GDP forecasts to avoid the need for
adjusting Defence’s plans in response to future fluctuations in GDP’ (p. 53).
Nonetheless, percentage of GDP remains an internationally recognised benchmark
of the priority given to defence spending, particularly by North Atlantic Treaty Organization (NATO) members.
In 2006, NATO members pledged to meet a 2% GDP guideline. In
2014, in response to Russia’s annexation of Crimea, NATO members reaffirmed
their commitment to the 2% guideline. Although at that time only 3 members met
the 2% commitment, this had jumped to 23 nations 10 years later (see Figure
1).
Figure 1 Defence
expenditure NATO members 2014–2024


Source: North Atlantic Treaty Organization, Defence Expenditure of NATO Countries (2014–2024),
April 2025, NATO website.
Since Russia’s invasion of Ukraine in February 2022,
NATO members (including newest members, Finland and
Sweden) have pledged spending on defence beyond the
minimum guideline:
In April 2025, US Secretary of State, Marco Rubio, asserted that NATO members, including the US, must commit to and
fulfil a pledge to increase defence spending to 5% of GDP. On 2 May 2025 the Trump administration put forward its 2026 discretionary budget request of US$892.6 billion, which it described as a 13% increase. However, Chair of the Senate Armed Services Committee, Roger Wicker, stated that the FY2026 budget
proposal ‘is a cut in real terms’ and leaves military spending flat.
Australia’s defence spending
Australia’s inaugural 2024 National defence strategy (2024 NDS) reintroduced the measure of defence spending as a
percentage of GDP with a promise to increase defence investment to 2.4% by 2033–34. In the lead-up to the 2024–25 Defence Budget,
Minister for Defence Richard Marles announced additional funding of $10.6 billion over the forward estimates.
However, Marcus Hellyer (Strategic Analysis Australia) calculated that it is ‘funding that was already programmed in the 2024 NDS’,
along with some ‘reprofiling’ of funding over the forward estimates (p. 13).
Table 3 shows the trajectory of the 10-year
2024 NDS defence funding plan alongside the forward estimates from the March
2025 budget. This shows that while Australia’s planned defence expenditure is
expected to rise, in the short term it is a modest increase rather than the
dramatic surge seen in other countries.
Table 3 Australia’s planned Defence funding to 2034
Total
defence funding profile 2024 to 2034 |
|
2024–25 |
2025–26 |
2026–27 |
2027–28 |
2028–29 |
2029–30 |
2030–31 |
2031–32 |
2032–33 |
2033–34 |
2024 NDS ($b) |
55.5 |
58.4 |
61.2 |
67.9 |
74.8 |
79.1 |
84.2 |
88.3 |
95.6 |
100.4 |
%
of GDP |
1.99 |
2.03 |
2.05 |
2.16 |
2.25 |
.. |
.. |
.. |
.. |
.. |
2025–26
Budget (estimates) ($b) |
56.6 |
59.0 |
61.8 |
67.6 |
74.1 |
.. |
.. |
.. |
.. |
.. |
%
of GDP |
2.03 |
2.05 |
2.07 |
2.15 |
2.23 |
.. |
.. |
.. |
.. |
.. |
Note: the GDP figures are based on Treasury projections of
nominal GDP annual growth using 2025–26 budget papers, which are only available
up to 2028–29.
Sources: Australian Government, 2024
National Defence Strategy, (Canberra: Department of Defence, 2024), 67;
Australian Government, Portfolio Budget Statements 2025–26: Budget Related
Paper No. 1.4A: Defence Portfolio, 18; Australian Government, Budget
2025–26: Budget Strategy and Outlook: Budget Paper No. 1, Table 1.1, 6;
Australian Bureau of Statistics, Australian
National Accounts: National Income, Expenditure and Product, Table 2 -
Expenditure on Gross Domestic Product (GDP), Chain volume measures, December
2024.
Last year, Mike Pezzullo (former Secretary of
the Department of Home Affairs and deputy secretary of the Department of
Defence) warned that ‘Australia’s security dilemma is now acute’ and argued
that defence spending should have been rising to 3% of GDP over the last 15
years. Kim Beazley (former Defence Minister,
former leader of the Opposition and recent ambassador to the US) also predicts
that Australia’s defence spending will move to 3%. Defence expert Jennifer Parker argues that debates around
percentage of GDP ‘is a distraction’ and the focus should be on defining ‘the
capabilities required to safeguard our vital interests, then secure the funding
– fast’.
Despite the dire strategic outlook, there
appears to be little public appetite for greater defence spending. A recent University of NSW Canberra interim report (April 2025), based on a limited national survey of public
attitudes towards defence, suggested support for increased funding was
relatively low. Only a third of respondents supported increasing funding and
the majority felt ‘that current spending was appropriate’ (p. 2). The Lowy Institute’s 2023 poll on Australia’s plans to acquire nuclear-powered submarines suggests minimal public support for the program.
Given the deteriorating strategic environment, the lack of public interest in defence-related issues (apart from major military acquisitions being delivered over budget and schedule) will continually
challenge parliamentary and public debate on defence and security. Public
discussion of a broader range of defence-related issues can only increase the understanding
of the public and the Parliament about the role and capabilities of the
Australian Defence Force and promote greater contestability and debate about
defence spending.