Jane’s Defence Budgets 2019 Annual Report shows growth in global defence spending slowed to just 1% compared to the 2018 spike of 6%. While growth slowed in most regions, Europe experienced exceptional growth of 5,2%, outperforming most emerging markets.

Six of the 10 fastest growing defence budgets in the world in 2019 are situated in Europe, including Bulgaria, which reported the fastest growth globally, with defence spending growing by 125% as the country made payment for eight F-16 Block-70 fighter jets in August.

“While growth in global defence spending slowed dramatically this year, Jane’s projects that global spending growth will moderate to between 1,5% to 2% a year over the next 10 years,” says Fenella McGerty, principal defence budgets analyst at Jane’s.

“Increases are dependent on the continuation of a stronger emphasis on defence in Europe but also on a return to more robust growth rates in emerging markets.”

Europe tops global growth chart

European defence spending is set to hit $300-billion in the next 24 months, having languished between $250-billion and $275-billion since 2005. Jane’s notes that Eastern European spending grew by 12% in 2019, the fastest rate globally while growth in Western Europe reached 4%, the fastest rate since the Cold War.

Key Western European growth markets in 2019 include Germany and Sweden with respective defence budget increases of 11% and 9%. Germany is now the seventh largest spender globally, up from ninth in 2018.

“Shifting strategic conditions have driven growth in European spending since 2014 as the regional security environment has deteriorated,” McGerty says. “Increases in Eastern Europe have been focused on improving readiness and bolstering capabilities. As such, spending on military investment in Eastern Europe has more than doubled since the annexation of Crimea in 2014 – from $4-billion in 2013 to $10,4-billion in 2019.”

Over the next decade Jane’s expects that growth in Eastern European defence spending will average 4% annually to reach $57-billion by 2030 and account for 2,7% of the global total.

US continues to invest in modernisation

After a 10% surge in 2018, US spending rolled back to $726,2-billion but still accounts for 40% of the global total. “In real terms, funding levels of $742-billion in 2018, $726-billion in 2019 and $721-billion in 2020 have enabled the US DoD to start and continue on the road to improved readiness and acquire improved war-fighting capabilities,” says Guy Eastman, senior analyst at Jane’s.

“Modernisation accounts are expected to reach the level of 247,3-billion in FY20 – the highest request level of investment funding in the last ten years. This will permit accelerated acquisition of capabilities inherent in ballistic missile defence, shipbuilding, military aircraft and missiles and munitions as well as RDT&E in science and technology.

“The US continues to focus spending increases on innovation, with 2020 funding extensions for hypersonics, artificial intelligence, directed energy, autonomy, cyber and space.”

Sub-Saharan Africa reports increase

“Military expenditure in sub-Saharan Africa recorded a 2% increase this year, with growth expected to continue in the coming decade,” says Ana Popescu, senior analyst at Jane’s. “Jane’s notes that regional budgets in 2030 are expected to be close to $18-billion – as opposed to the $13-billion we see this year. Modest growth has been seen by Kenya and Tanzania, which recorded growth of 9% and 4,5% respectively.”

Bigger spenders – like South Africa, Angola and Nigeria – saw budgets cut year on year, but all are expected to recover, except Angola, which is expected to see its budget fall further to $1,6-billion in 2020. Nigeria, meanwhile, will have a significant increase of 36% in spending in 2020, but Jane’s notes that the funds are almost entirely allocated to personnel costs, putting into question the commitment to procurement.

Middle East spend to pass $200 billion

Middle East regional spending came to $174-billion in 2019 and should surpass $200-billion by 2026 despite a short term slow-down in Saudi Arabia’s defence budget. Jane’s notes that growth remains conservative by regional standards as governments generally remain cautious about pursuing expansionary budgetary measures, particularly in light of volatile energy prices.

Nonetheless, complex security threats have ensured defence spending was ringfenced from wider cuts as countries pursued an expansion of personnel numbers, increased readiness, greater operational activity and major investment programmes.

“The acute nature of security concerns within the region mean that defence budgets will continue to be shaped by strategic factors,” says McGerty. “Despite fiscal constraints, widespread militant activity, intense inter-state rivalries, and the adoption of a more pro-active stance towards regional stability continues to result in elevated levels of military spending in the Middle East.

“Consequently, regional spending continues to account for almost 5% of GDP compared to the global average of 2%.”

Asia-Pacific continues to stall

Jane’s highlights that regional spending came to $472-billion in 2019, up from $250-billion in 2005, a 90% increase in real terms over a 14-year period. While 2019 growth maintained the region on an upward trend, growth of just 2,9% was also the slowest annual expansion since 2010. Stronger growth should be possible from 2020, driven primarily by an acceleration in Chinese spending.

Jane’s Defence Budgets estimates that the Chinese defence budget came to $217-billion in 2019, accounting for 46% of the regional total, up from 40% in 2012. The next biggest spender in the region is India, whose 2019 budget was set at $56-billion, or just over 12% of total spending.

“Economic expansion has been the primary driver of increases in defence expenditure in ASPAC since 2009 and growth in defence funding has closely tracked the expansion of the region’s economies over the same period,” Popescu says.

“On the strategic side, the threat from North Korea has spurred growth in Japan as well as South Korea; conflict between India and Pakistan over Kashmir has been rekindled; and there has been sustained investment in countering long-running insurgencies in South-East Asia.”

More NATO members hit target

Ten NATO members reached the 2% of GDP benchmark for defence expenditure in 2019 – the US, Bulgaria, Greece, Estonia, Latvia, Romania, UK, France, Poland and Lithuania. This compares to just four members in 2014 – the US, the UK, Greece, and France (figures include military pensions).

“NATO’s 70th year saw 10 countries achieve the 2% of GDP benchmark up from just four members five years ago,” says McGerty. “Crucially, more and more countries are also investing over 20% of their defence budget in equipment with 19 members reaching the goal in 2019 – the highest number since 2007.”

Published courtesy IT-Online

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