Flat 50% Off on All Research Reports! Use code CRISP50 at checkout. Download Now!
Flat 50% Off on All Research Reports! Use code CRISP50 at checkout. Download Now!
World military expenditure, by region, 1988–2024
Global military spending is entering its sharpest upcycle since the Cold War. Global military spending is entering its sharpest upcycle since the Cold War. This global defence spending boom is reshaping how nations rebuild, rearm and modernize their defence capabilities in an era of contested borders and strategic uncertainty.
In FY2024, global defence expenditure reached USD 2.72 trillion, a real increase of 9.4 percent from the previous year which is the steepest rise since 1987. By FY2025, spending is projected to cross USD 2.8 trillion marking two consecutive years of accelerated military outlay.
This surge reflects a structural shift. Defence is now a permanent pillar of national strategy and industrial policy. Aerospace and defence companies are positioned to benefit from this multi year capital spending boom supported by predictable long term budgets and rapid technology modernization.
The Russia Ukraine conflict and rising Indo Pacific tensions have triggered a global rethink of military preparedness. Countries are not simply replenishing stockpiles. They are modernizing entire ecosystems including satellites, cyber networks, stealth aircraft and advanced electronics.
Key drivers include:
The result is a synchronized global arms renewal, with Europe leading, Asia-Pacific accelerating, and the U.S. maintaining its technological edge.
Europe’s defence landscape has transformed dramatically in three years. What began as an emergency response to Ukraine has evolved into a decade-long modernization agenda.
For Europe’s industrial base, this is a renaissance. Order books for Rheinmetall, Leonardo, Airbus Defence, and BAE Systems are at record highs. Rheinmetall is scaling ammunition output by 30% through FY2026, while Leonardo plans 40 satellite launches by 2028, reinforcing Europe’s autonomous space defence capability.
Asia’s build-up is strategic, a slower but sustained arms race. Combined regional defence budgets could surpass US$550 billion by FY2026, growing at 7–8% annually.
Asia-Pacific now complements Europe as a core growth engine for aerospace and defence investment.
The share of world military expenditure of the 15 countries with the highest spending in 2024
Unlike past cycles focused on tanks and artillery, the FY2025–FY2030 wave is increasingly technology-led:
Ground Systems & Ammunition: NATO and European nations rebuilding land forces; Rheinmetall, BAE, and Saab increasing armoured vehicle and artillery production. Orders likely sustained through FY2027.
Defence Electronics & Systems Integration: Global spending expected to grow 8–9% CAGR through FY2028, driven by radar, communications, and surveillance. Thales, L3Harris, and Leonardo are well-positioned.
Satellites & Space Defence: FY2025 satellite defence capex estimated at US$30 billion, potentially rising to US$45 billion by FY2028 for LEO ISR constellations and communications networks. Airbus Defence, Northrop Grumman, and Leonardo are key beneficiaries.
Aerospace Platforms & UAVs: Next-generation fighters, airlift systems, and UAVs strengthen order books. Lockheed Martin projects US$160 billion backlog by FY2025, Airbus Defence reports 18% YoY order backlog growth.
For institutional investors, defence spending is now structural, not cyclical. Sovereign urgency, industrial localization, and technological complexity ensure contracted revenue visibility.
Europe offers compelling exposure via the European Defence Fund and NATO spending. The U.S. maintains momentum through its FY2025 National Defense Authorization Act, emphasizing hypersonics, AI warfare, and cyber systems.
Investors should focus on four structural growth segments:
Dual-Use Aerospace Technologies: Civil-military convergence in UAVs, propulsion, and advanced materials offering resilience and revenue diversification.
Space & Satellite Defence Systems: High-margin growth anchored by sovereign constellations and ISR networks.
Electronic Warfare & Command-Control Systems: Recurring upgrade cycles fueled by AI-enabled situational awareness.
Armoured Platforms & Ammunition Replenishment: Backlog-driven stability from NATO and allied inventories.
Despite challenges, risks remain:
These are largely cyclical; the structural growth story remains intact.
The scale and momentum of this rearmament cycle are unmistakable:
Together, these figures reinforce the view that global defence and aerospace spending is not a transient surge, but a long-duration capital investment cycle, offering investors durable earnings visibility and structural compounding potential through the decade.
By FY2026, the “aerospace defence spending boom” will have reshaped global industrial priorities. For investors, it represents a once-in-a-decade opportunity: a sector backed by government budgets, fuelled by technology, and supported by long-term global necessity.
In a world that has rediscovered the economics of deterrence, the arms and aerospace super-cycle has only just begun.
Get the full Aerospace and Defence report on CrispIdea and unlock deeper insights, forecasts and valuations.
Access the complete research on CrispIdea and stay ahead of the global defence supercycle.
Download Aerospace and Defence report at 50% discount!
Use Code: CRISP50 | Valid till 27th November 2025
Global defence spending is increasing at the fastest pace since the Cold War due to escalating geopolitical tensions including the Russia Ukraine conflict and Indo Pacific security concerns. Many NATO countries are correcting decades of under investment and aiming to meet or exceed the benchmark of two percent of GDP. Governments are linking defence procurement to industrial policy prioritizing local manufacturing and technological sovereignty. This includes rapid acceleration in satellites, cyber systems and unmanned platforms. Collectively these factors have triggered a multi year global rearmament cycle.
Europe and Asia Pacific are the primary growth engines. Europe is experiencing historic rearmament with substantial increases in budgets across Germany, Poland, Denmark, France and the United Kingdom. Asia Pacific nations including China, India, Japan and South Korea are rapidly modernizing their air, naval and missile capabilities.
Across sectors investors should focus on space and satellite defence systems, electronic warfare and command control systems, armoured platforms and ammunition replenishment and dual use aerospace technologies.
Key risks include manufacturing cost inflation, supply chain disruptions particularly in semiconductors, geopolitical volatility that may delay procurement, budget reallocation in selected countries and currency fluctuations that may affect exporters. These risks are largely cyclical while the long term structural momentum remains strong.
