Global Military Spending Surges to Highest Level in Almost Four Decades

Global military spending has reached its highest level in almost four decades, according to the Stockholm International Peace Research Institute (SIPRI). In nominal terms, global military expenditures in 2025 hit $2.887 trillion, equivalent to 2.5 percent of the global gross domestic product.

The surge in military spending is driven by a deteriorating security environment, with ongoing conflicts in Ukraine and Gaza adding to regional instability. The war in Ukraine has particularly disrupted the balance of power, prompting governments to expand their military capabilities.

Japan's defense budget is also increasing, with plans to hike its defense spending to 3.5 percent of GDP by 2027, nearly doubling current outlays from around $11 trillion yen to over $20 trillion yen. The government has identified the defense industry as a key sector for investment, driven by the need to develop new technologies and capabilities.

However, experts warn that this entanglement of defense buildup with economic policy risks sliding into 'military Keynesianism', where military spending is used to support the broader economy. This carries dangers of its own, including a loss of effective restraint on spending and pressure on civilian life and public finances.