Defense budget spending to grow 3.5% CAGR to $2.4 tn in 2025

The global defense budget expenditure will resume growth at a CAGR of 3.5 percent to approach $2.4 trillion in 2025, following a 3 percent contraction in 2015, says Strategy Analytics.

One of the growth drivers is the force modernization using advanced technologies in Western countries. For advanced military nations, there is a need to counter a re-emergence of conventional threats while also maintaining capabilities to deal with on-going asymmetric wars against terrorism.

As part of this defense spending, the opportunities available to the industry for military equipment/capability and support procurements are forecast to grow from $528.9 billion in 2015 to $739.3 billion in 2025 with a CAGR of 3.4 percent.

“A range of factors will drive spending but there are a number of common drivers that recur within and across the different regions which we believe will underpin future spending on defense,” said Asif Anwar, director of the ADS service at Strategy Analytics.

These include combatting the expansion of ISIL (ISIS, IS) and other asymmetric threats; contesting the ambitions of a resurgent Russia; maintaining spending levels in line with NATO and other coalition commitments; maritime and border protection; and developing effective strategies to counter China.

The Strategy Analytics report said major emerging countries are playing catch up driven by a variety of geopolitical factors. Spending in these nations is being driven by an impetus towards increasing mission envelopes for existing platforms by acquiring advanced defence capabilities as well as desires to develop indigenous defence technology capabilities.

Strategy Analytics’ 2016 global defense spending analysis is based on an assessment of 93 countries that spend a minimum of $500 million on their annual defense.

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