As China and Russia boost military spending, so do their neighbours

BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/15

New data compiled by the Stockholm International Peace Research Institute (SIPRI) show that military spending of governments increased 1 % last year, corresponding to about 2.3 % of world GDP. Measured in dollar terms, the United States accounted for 36 % of total military spending, China 13 %, Saudi Arabia 5 % and Russia 4 %. The weak ruble was the main reason Saudi Arabia overtook Russia in the rankings.

Military spending declined last year from 2014 in most parts of the world, but China, Russia and Saudi Arabia posted increases of 6–8 % y-o-y in constant dollars. The growth in military spending was even higher in countries in Central Europe and the Baltic region that share borders with Russia or Ukraine. The rise of tensions in the South China Sea was also reflected in sharp spikes in military spending in the Philippines, Indonesia and Vietnam.

Russia’s military spending climbed last year to 5.4 % of GDP, driven up by Russia’s economic recession and the intense military modernisation. Rapid economic growth in China has helped hold the relative share of increased military spending to a level of around 2 % of GDP. The ratio of military spending to GDP in the United States fell to 3.3 % last year.

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