US military spending grew, Russia became third in the ranking

7 years ago - Published in Finance, Fundamental Analysis

The United States remains the country with the highest annual military expenditure in the world, according to new figures from the Stockholm International Peace Research Institute (SIPRI). US military spending grew by 1.7 per cent between 2015 and 2016 to $611 billion, for the first time in six years. Military expenditure by China, which was the second largest spender in 2016, increased by 5.4 per cent to $215 billion, a much lower rate of growth than in previous years. 

Russia became the third-largest spender in 2016 due to Saudi Arabia’s drastic fall, it was the third largest spender in 2015 but dropped to fourth position in 2016 as its spending fell by 30% to $63.7 billion despite its involvement in regional conflicts.
“The growth in US military expenditure in 2016 may signal the end of a trend of decreases in spending, which resulted from the economic crisis and the withdrawal of US troops from Afghanistan and Iraq,” the report said. 

China remains the second-largest spender – its military expenditure increased by 5.4 per cent to $215 billion, according to the study. Meanwhile, Russia moved into third place, increasing its spending by 5.9 per cent to $69.2 billion. While the expenditure increase played a certain role in scoring this place, it was mainly caused by a huge drop in Saudi Arabia’s spending, which moved into fourth.

Saudi military expenditure shrank in 2016 by 30 per cent to $63.7 billion, “despite its continued involvement in regional wars,” the study stated. Other oil-price dependent countries experienced similar dramatic drops, namely Venezuela, South Sudan, Azerbaijan and Iraq.

There were also large falls in military spending by many oil-exporting countries. “Falling oil revenue and associated economic problems attached to the oil-price shock has forced many oil-exporting countries to reduce military spending,” said Nan Tian, a researcher with SIPRI.“For example, between 2015 and 2016 Saudi Arabia had the biggest absolute decrease in spending of $25.8 billion.”

Military expenditure in Western Europe rose for the second consecutive year amid NATO military activities going alongside with the “Russian threat” narrative, which persisted in the Western media.

“The growth in spending by many countries in Central Europe can be partly attributed to the perception of Russia posing a greater threat,” a senior researcher with the SIPRI AMEX program Siemon Wezeman said. “This is despite the fact that Russia’s spending in 2016 was only 27 percent of the combined total of European NATO members.”

Total global military expenditure in 2016 rose by 0.4% over 2015 in real terms, according to the new figures.The report said spending continued to grow in Asia and Oceania, Central and Eastern Europe and North Africa. By contrast, spending fell in Central America and the Caribbean, the Middle East, South America and sub-Saharan Africa.