Growing Security Fears Boost Defence Budgets

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Security fears and threats to stability have driven many Western governments to end cuts to defence spending, according to a new report released today by IHS Inc., the leading global source of critical information and insight.

The IHS Jane’s Defence Budgets Annual Report examines and forecasts defence expenditure for 104 countries and captures 99 percent of global defence spend.

Key points from this year’s report:

  • Asia Pacific’s share of global defence spending will rise from one fifth in 2010 to almost one third by 2020. In the same time frame, North America is expected to fall from almost half to around one third of global spending;
  • Growth accelerated in Asia Pacific as states bordering the South China Sea boosted defence spending;
  • Eastern Europe replaced the Middle East as the region with the fastest growing defence budgets, with double-digit increases in response to the Ukraine crisis;
  • Russia saw the largest increase in defence spending for a decade, but cuts will begin next year due to deteriorating economic and fiscal conditions;
  • Low oil prices have seen the unprecedented period of budget increases in the Middle East come to an end, however cuts were limited.

Global trends

Global defence spending is set to increase from $1.65 trillion in 2015 to $1.68 trillion in 2016 as global economic growth accelerates and Western markets respond to heightened security concerns. Globally, 2016 is expected to mark the return to defence budget growth, which is expected to be sustained for the remainder of the decade. NATO defence spending is expected to increase for the first time since 2010.

“This year was another year of flat defence spending but we are now entering a growth period,” said Fenella McGerty, principal analyst at IHS. “Defence strategies have shifted in the West in light of worsening security threats.”

While the US continues to be the largest single player, the Asia Pacific region will be the driving force behind global defence budget growth over the next five years.

Meanwhile, lower oil prices are serving to subdue the Middle East and North Africa regions. “Of the ten fastest growing defence budgets in 2015, just three were in the Middle East, down from six last year,” McGerty said.

In terms of defence investment, $1.6 trillion is expected to be spent on defence procurement from 2016 to 2020, with a further $560 billion due to be invested into research and development.



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