2016/10/25 10/20 Strategy Analytics: Defense Spending Back on Track following Contraction in 2015

Spending growth rate to resume with global budget reaching $2.4 trillion in 2025

Boston, MA - October 20, 2015 - Force modernization in Western and other advanced military nations is being driven by a recognition that there is a need to counter a reemergence of conventional threats while also maintaining capabilities to deal with on-going asymmetric wars against terrorism. Strategy Analytics Advanced Defense Systems service forecast, “Global Defence Budget Expenditure Forecast: 2015 – 2025” predicts the global defense budget expenditure will resume growth at a CAGR of 3.5% to approach $2.4 trillion in 2025, following a 3% contraction in 2015.

As part of this spending, the opportunities available to the industry for military equipment/capability and support procurements (including related procurements under Research Development Test & Evaluation (RDT&E)) are forecast to grow from $528.9 billion in 2015 to $739.3 billion in 2025 with a CAGR of 3.4%.

“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,” noted Asif Anwar, Director of the ADS service. “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.”

“Major emerging countries are also playing catch up driven by a variety of geopolitical factors, many of which mirror the driving trends in the advanced nations,” observed Eric Higham, North American Director for ADS. “Spending in these nations is also being driven by an impetus towards increasing mission envelopes for existing platforms by acquiring wide ranging advanced defence capabilities as well as desires to develop indigenous defence technology capabilities.”

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