The decade from 2013 to 2022 saw a growth of 19% in global military spending, with every year since 2015 seeing a rise. In 2022 alone, global military expenditure reached a record high of $2240 billion, a 3.7% increase in real terms from the previous year.
These figures from SIPRI’s ‘Trends in World Military Expenditure, 2022’ are yet another confirmation of the defense industry’s huge economic significance and a hint at the market opportunities it provides.
Top Military Spending Countries
The top 15 countries in military spending in 2022, which account for 82% of the world's military expenditure, spent $1842 billion. Much of this amount has been spent on public procurement contracts and each contract award can be traced by TenderAlpha in order to get intelligence about the buying agency, the contract awardees, the subject and contents of the contract, as well as its length and value.
The United States and China remain the largest spenders, with Russia, India, and Saudi Arabia rounding out the top five. The US spent $264 billion on modernizing and improving its own military capabilities in 2022, while China allocated $292 billion, marking the 28th consecutive year of military spending growth for the country.
Naturally, Russia’s invasion of Ukraine was the main driver behind the 13% rise of military spending in Europe during the year - a figure unseen since the end of the Cold War. Russia increased its spending by an estimated 9.2% to move from fifth to third largest spender in the world in 2022, while Ukraine entered the top 15 for the first time (at rank 11) after a 640% increase in its military expenditure.
In terms of the contribution to global military spending in 2022, the top 5 countries (the US, China, Russia, India, and Saudi Arabia) together accounted for 63% of the total amount.
The US remained the undisputed leader accounting for 39% of world military spending in 2022. Some 30% of the nearly $880bn spent by the country was directed towards modernizing and improving its own military capabilities (i.e. arms procurement and military research and development).
Military Spending Trends in Eastern Europe
Eastern European countries, especially those that are NATO members, record military spending figures that are significantly higher than their Western European counterparts.
A publication by the International Centre for Defence and Security reveals that the ten central and eastern European states that joined the Alliance in 1999 and 2004 increased their defense spending relative to GDP by an average of more than 65% between 2014 and 2022, while the corresponding figure for the founding members (excluding Iceland) is less than 20%.
Poland and Czechia are three of the countries that joined the Alliance in 1999. And today, Poland is on the course of becoming one of the strongest armies in Europe, as outlined by Polish Defence Minister Mariusz Blaszczak.
Poland is looking to procure over 1,000 K2 tanks from South Korea and 366 Abrams tanks from the US (250 of the newest kind). Warsaw is also planning to buy 700 self-propelled howitzers from South Korea and 200 M142 HIMARS rocket launchers from the US, as well as 300 similar equipment produced by the Koreans.
Furthermore, 2022 saw Poland spend the equivalent of 2.4% of its GDP for military. This was the fourth highest percentage among NATO countries behind Greece, the US, and Lithuania.
In the meantime, The Czech government has approved legislation making spending of 2% of GDP on defense compulsory, the only other country apart from Poland in the region to reach the target laid down in 2006. Some of the most important purchases planned by Czechia are CV90 infantry fighting vehicles (IFVs) from Sweden and F-35 fighter jets from the US.
According to Matej Kandrik, Executive Director of the Adapt Institute in Bratislava, the war in Ukraine changed two things in the Visegrad countries’ military modernisation plans.
“On the one hand, it accelerated many different programs. Usually, military procurement is a very slow process, and it can take years between the moment an announcement is made and when the equipment actually reaches the country. But now governments are putting much more stress on getting things done.
“And, on the other, some priorities have changed: for example, some countries are now focusing on replacing weapons they have sent to Ukraine or are adapting their purchases to lessons learned from the war in Ukraine.”
What we can conclude from Mr.Kandrik’s observations, is that the public procurement process has become more dynamic. And this is true not only among the countries in the Visegrad Group. The war in Ukraine has triggered every country that aims to boost its defense to be agile in the procurement of the products and services needed. Decisions are taken faster and this calls for anyone interested in the defense industry to stay alerted.
Why is it Worth Monitoring Military Contracts Spending?
With access to critical information about military contracts, you can explore opportunities in areas such as defense, aerospace, and security, where contracts are often highly lucrative and long-term. Government contractors usually enjoy greater financial stability and predictability of cash flow. This is a solid argument in favor of public procurement participation and/or partnering with established contractors as a subcontractor.
Evidently, the insights into government spending patterns offered by TenderAlpha are a valuable tool to assess business opportunities in the above-mentioned sectors. Learning who the most successful defense contractors are, what types of products and services they deliver, and how much they gain from their participation in public procurement facilitates the financial analysis of these firms and may be a predictor of their future performance.
What is more, the growing military expenditure signals that more and more money is spent across defense and related industries. Therefore, the data revealing where this money comes from could be instrumental in performing geopolitical analyses and determining the effort each country puts into its defensive capabilities.
Having said all that, government contracts data, particularly in the defense and military contracting field, is a must for anyone aspiring to either enter the public procurement market, discover business partners and opportunities, invest in successful government contractors, or get an idea about the defense commitments undertaken by tens of countries worldwide.
Wondering if TenderAlpha’s contract awards data is right for you? Get in touch now to talk about your needs!