Apr 28, New Delhi
World military expenditure crossed the $2.9 trillion mark in 2025, continuing a decade-long upward
trend that shows no sign of slowing. The increase, estimated at roughly three percent over the
previous year, reflects a broad and accelerating shift in how governments are prioritising national
security budgets. As a share of the global economy, defence spending has climbed to levels not seen
in over fifteen years, signalling a fundamental change in the post-Cold War security order.
The three countries that dominate global military expenditure, the United States, China and Russia,
together accounted for more than half of all spending worldwide. Their combined outlays reflect
sharply different strategic pressures, yet all three continued to pour resources into their armed
forces, albeit at varying rates.
The United States pulls back, but not for long
America spent an estimated $954 billion on its military in 2025, a figure that, despite representing a
decline of around seven to eight percent from the year before, still dwarfs every other nation on
earth. The reduction was largely a bookkeeping outcome rather than a policy retreat. Washington
had previously recorded its financial military support to Ukraine on its own national accounts, and
when that pipeline paused, the headline number fell accordingly.
Analysts watching Congressional budget approvals have little doubt about what comes next.
Lawmakers have cleared over a trillion dollars for the current fiscal year, and the White House has
put forward proposals that could push the figure toward $1.5 trillion by 2027. In practical terms,
American military dominance is not diminishing. It is temporarily resting before a significant
expansion.
Europe rearming at a generational pace
The most striking regional story of 2025 was the speed and scale of European rearmament. Across
the continent, defence budgets grew by around fourteen percent, reaching a combined figure of
roughly $864 billion. That rate of increase has not been seen since the early 1950s, a period when
Europe was still rebuilding its armed forces in the shadow of the Second World War and the
emerging Cold War.
Two forces are driving this. First, the war in Ukraine has continued into its fourth year, keeping the
threat of large-scale conventional conflict on European soil firmly in the minds of defence planners.
Second, the expectation that the United States will no longer serve as the automatic guarantor of
European security has prompted governments across the continent to invest in their own
capabilities.
Germany nearly doubled its share of the burden by raising spending 24 percent to $114 billion,
cementing its place as one of the world’s top five military spenders. Spain increased its budget by
fifty percent, crossing the two-percent-of-GDP threshold that NATO has long urged members to
meet, the first time Madrid had done so in three decades. Ukraine and Russia both reached historic
highs in terms of the proportion of government revenue directed toward the military, with Kyiv
allocating an extraordinary share of its entire economy to the war effort.
Asia: thirty years of Chinese growth and a nervous neighbourhood
China has increased its defence budget every single year for over three decades. In 2025 that streak
continued, with an estimated increase of 7.4 percent bringing total spending to around $336 billion.
The pace of that annual rise was the sharpest in ten years, and it sits within a long-term plan to
transform the People’s Liberation Army into a fully modernised fighting force by the mid-2030s.
The reaction among China’s neighbours has been predictable. Japan raised its military budget nearly
ten percent to $62.2 billion, a level of commitment relative to its economy that the country has not
seen since the late 1950s. Tokyo also moved on defence export policy, lifting restrictions that had
been in place for decades and agreeing to supply warships to Australia. Taiwan lifted its own
spending by fourteen percent, its sharpest increase in living memory, as Chinese aircraft incursions
around the island reached record numbers. India pushed its defence budget up nearly nine percent to
$92.1 billion, with its ongoing tensions with Pakistan playing a significant role.
Middle East and Africa: a mixed picture
The Middle East as a whole saw relatively flat overall spending, though the internal picture was
uneven. Israel’s budget fell by roughly five percent following a ceasefire arrangement in Gaza,
though it remained dramatically higher than pre-conflict levels. Iran’s official figures showed a
decline in real terms, a consequence of severe domestic inflation rather than any reduction in
ambition, with analysts noting that revenues from oil sales likely keep actual military capacity
growing regardless of what official accounts show.
Africa recorded a meaningful increase of around eight to nine percent across the continent as a
whole, with North African nations leading the way. As a share of national income, some African
countries are now among the most militarised in the world.
The broader picture
What the 2025 data makes clear is that the world has entered a period of sustained and broad-based
military expansion. This is not a story about one or two countries in conflict. It is a story about
dozens of governments simultaneously concluding that they need to spend more on their armed
forces, for reasons ranging from active wars to alliance anxiety to long-range strategic competition.
Defence industry stocks reflected this reality throughout the year, with manufacturers in Europe,
South Korea and Japan all posting substantial share price gains as order books filled up. The
European Union has set out plans to mobilise hundreds of billions of euros for collective security
investment by the end of the decade.
The coming years are unlikely to bring any reversal. Multiple governments have set spending targets
that stretch years into the future. Active conflicts remain unresolved. And the political conditions
that might once have supported disarmament agreements are, for now, absent. The world is
spending more on weapons than at any point in recent memory, and most indicators suggest it will
continue to do so.
