As a result of rising geo-political tensions, the prospects for increases in global defense spending have been boosted significantly. Initial projections suggest that growth in defense budgets is likely to return to levels not seen since the early days of the wars in Afghanistan and Iraq as governments around the world seek to bolster military capabilities.
Aviation Week Network’s own projections for global military spending were revised upwards significantly over the course of 2022 based upon govern ment announcements over recent months. As a result, defense expenditure returned to growth in 2022 following the first cuts to spending in 8 years in 2021. More importantly for the defense sector the long-term nature of many of the pledges being made by governments could result in as much as $2 trillion being added to spending over the 2022-2032 period.
NATO members have been the principal drivers of these trends with significant improvements occurring in the outlook for spending in both North America and Europe. The U.S. defense budget remains under pressure due to challenging fiscal conditions and competing priorities however projections within the Fiscal Year 2023 budget request ostensibly added around $420 billion to defense plans for the period between 2023 and 2030. Both in proportional and absolute terms, the majority of this new spending is expected to come from Europe, where more than 20 countries have now announced their intent to significantly increase defence expenditure.
While the shift in overriding conditions has been most visible in the North Atlantic region, tensions have long been rising in Asia, prompting large scale increase in defence budgets in key markets such as Australia, Japan, South Korea and Taiwan. Meanwhile higher oil prices caused by the global economic recovery and then exacerbated by Russia’s war in Ukraine have eliminated longstanding budget deficits in the Persian Gulf, boosting prospects in the world’s most crucial defence export market.
