Global Defense Spending Remain Moderate Since 2008: Deloitte Report

Global commitments to defense have moderated, as economic development reduces dependence on defense spending, according to Deloitte’s global Public Sector Defense practices’ report entitled 2016 Global Defense Outlook. 

According to the report, Pakistan, India, Iraq and Russia maintain the world’s highest commitments to defense, as measured by Deloitte’s Defense Posture Index - a numerical ranking of national-level commitments to defense.

Deloitte’s Defense Posture Index also reveals that only nine of the fifty largest defense–spending nations raised their commitments to defense over the past five years. Only one of these is in Europe (France); the other eight are in Africa, Asia-Pacific and the Middle East.

“Only nine of the fifty largest defense spenders have raised their defense posture since 2008. One of these is in Europe; the other eight are in Africa, Asia-Pacific and the Middle East,” says Jack Midgley, Asia Pacific Region Public Sector Defense leader for Deloitte Global. “Some 41 countries, including the United States, Russia and China have held the line, or lowered their overall commitment to defense. Pakistan, India, Iraq and Russia maintain the highest defense postures, while Belgium, Canada, Argentina and Germany display the lowest ones among the Top 50 defense spending nations.”

As per the report, the combined annual defense budget of the 50 largest defense spenders is projected to remain flat at about US$1.6 trillion through 2020. Twelve of the Top 50 nations are projected to reduce annual defense budgets by a total of $44B, paced by the projected US reduction of US$38B (2020 vs. 2016).

Sixteen of the Top 50 will increase defense budgets by more than US$1B annually, adding US$91B to the total global defense budget. China, India, South Korea, and Australia―all Asia-Pacific states―plan the largest defense budget increases, accounting for US$70B or 80 percent of the total global increase through 2020. 

“Even as commitments to defense continue to moderate worldwide, economic forces are creating significant new tensions among military powers,” said General Charles Wald, vice chairman and Federal Practice Senior Advisor of Deloitte LLP in the US. “These new tensions have produced five emerging fault lines around the globe, signaling that countries must be prudent and strategic with their investments in defense to address emerging threats to their nation and their implications on the world at large”.