Defense expenditures in the world grow as economic decline continues

In 2020, the world spent $1.83 trillion on defense, which marked an increase of 3.9 percent in real terms, the latest Military Balance report said. The amount that governments of the world spent on defense in 2020 was only "slightly lower" compared to 2019, The Diplomat reports.

The Military Balance report also said that economic output in the world contracted by 4.4 percent due to the pandemic. At the same time, military expenditures as per percentage of GDP increased from 1.85 percent in 2019 to 2.08 percent in 2020, the publication said.

In a nutshell, global economy has declined during the pandemic year, but military spending has remained on the level, which was nearly the same as in the previous year.

The two powers behind the total hike of 3.9 percent in global military expenditure are the US and China. The defense budget of the United States saw a hike of 6.3 percent in 2020 in real terms, whereas that of China slowed down in its growth from 5.9 percent in 2019 to 5.2 percent in 2020.

The Indo-Pacific region, outside China, also saw reduced growth in defense spending as it declined from 3.8 to 3.6 percent. According to the Military Balance report, China's defense spending in 2020 worth $12 billion was still considerably higher than increases in defense budget increases in all other Asian countries combined.

As for the Indo-Pacific region, Japan approved a "record" defense spending of $51.7 billion (5.34 trillion yen) for 2021. Japan's defense budget has been growing for the past nine years, mostly due to regional threats including China and the DPRK (North Korea). Tokyo also funds non-conventional military areas like outer space, cybersecurity and electromagnetic warfare.

India also increased its defense spending for 2021-2022. The military budget that India exposed in February of 2021, saw a marginal hike of 1.4 percent from 4.71 trillion Indian rupees in the 2020-2021 budget to 4.78 trillion rupees in 2021-2022.

The negative impact of the COVID-19 pandemic has been significant, but it does clearly indicate the priorities of the government for the defense sector. Noteworthy, the World Bank's South Asia Economic Focus report says that India's GDP is to shrink by 9.6 percent in 2020-21, which is far worse than the 3.2 percent predicted in earlier June.

Australia, another critical Indo-Pacific power, is to be spending around AUD 42.75 billion, which is around 2.19 percent of the country's GDP. The trend will continue to reach around 2.38 percent of GDP by 2023-2024.

Smaller powers in South-East Asia are beginning to increase their military budgets as well. For example, Vietnam's defense spending, which was estimated to be around $5.8 billion in 2018 (2.36 percent of GDP), was likely to go up further given that the economy has done reasonably well over the last 20 years.

Singapore has hiked its defense spending to around SGD 15.36 billion ($11.56 billion). Other countries such as the Philippines, Indonesia and South Korea have also increased their defense spending.