KUALA LUMPUR (March 1): Global defence spending reached US$1.83 trillion in 2020, a 3.9% annual uplift in real terms, according to London-based  International Institute for Strategic Studies (IISS).

In a report released last week, IISS said that as a proportion of gross domestic product (GDP), global spending sharply increased from an average of 1.85% in 2019 to 2.08% in 2020 as military budgets were maintained, despite severe economic contractions caused by the coronavirus pandemic and the series of lockdowns introduced around the world in response.

It said global defence spending growth has strengthened since 2018 but could slow in 2021, as the US defence budget is set to flatten and Asia–Pacific spending growth is expected to slow.

IISS said real growth in China’s defence budget slowed to 5.2% in 2020, down from 5.9% in 2019, while wider spending growth in Asia also slowed, from 3.8% to 3.6%, as countries funded pandemic-relief efforts.

That said, China’s 2020 increase, amounting to a nominal US$12 billion, was still greater than the combined defence budget increases in all other Asian states.

Indeed, increases in the US and Chinese defence budgets accounted for almost two-thirds of the total increase in global defence spending in 2020, said IISS.

The think tank said China’s military modernisation continues to drive procurement and research and development (R&D) efforts in the US and is also shaping defence policies in the Asia-Pacific.

An example of this was Australia’s mid-2020 Defence Strategic Update with its emphasis on conventional deterrence and more capable strike systems, even if the document made few direct references to China.

Meanwhile, sharpened threat perceptions in Europe have helped boost European defence spending, after Russia’s 2014 seizure of Crimea and involvement in the conflict in Ukraine’s east.

European NATO members have increased their defence expenditure as a proportion of GDP.

This trend continued in 2020, with their spending reaching 1.64% of GDP, up from 1.25% of GDP in 2014. However, despite the coronavirus pandemic causing a 7% average economic contraction among members in 2020, only nine European NATO members met NATO’s recommendation that they spend 2.0% of GDP on defence.