PwC Global Defense Perspectives 2017 used recent, current and anticipated defense spending trends and the major investment, institutional, structural and strategic priorities and challenges impacting the 71 nations in the analysis.
The analysis, which looked at defence prioritisation (spending as a percentage of GDP) and security posture (the extent to which countries deploy air and ground forces outside its national boundaries and the amount of military equipment that a nation sells or leases), found that the projected compound annual growth rate of defence spending from 2017-2021 will reverse previous declines in spending from 2012-2016 in 45 per cent of the countries assessed. This includes major players the US and the UK, and emerging economies such as Turkey and Brazil.
The report also found that in the south-central Asia and Pacific Rim region, the five nations spending the most on defence are China, India, Japan, South Korea and Australia.
Despite the projected growth in spending, there is still severe pressure on global players’ defence spending as threats continue to increase, including cyber insecurity gaining prominence, the analysis found. The shift in global economic power from West to East, demographic change and the rise of technology are among global megatrends cited in the analysis as having a “profound effect” on defence and security.
Rollie Quinn, PwC global government and public services leader, said as the traditional battlespace changes to one with a stronger cyber focus, the security challenges are becoming much more difficult.
“The security challenges confronting national defence organisations are complex and dynamic," said Quinn.
"The nature of what defines today’s ‘battlespace’ is changing rapidly as cyber criminality and information warfare are increasingly used as disruptive tools for damaging cyber attacks on individuals, governments and commercial entities. Both defence prioritisation and posture will continue to increase to meet these evolving threats."
In a focus on the NATO alliance, the report also found that while defence spending trends remain negative among NATO nations, it is likely increasing pressure from NATO allies and improving economic conditions will enhance the prospects for more NATO nations to meet the 2 per cent guideline in the next five years. Australia committed to spending 2 per cent of GDP on defence by 2020-21 in the 2016 Defence White Paper.
The analysis also found that rising geopolitical tensions are fuelling major increase in global arms sales and, to meet the global demand for arms, it is likely that nations such as China and India will increasingly challenge the traditional arms supplier duopoly of the US and Russia, which combined supplied 56 per cent of the arms exports from 2012 to 2016.