Estimates of real military spending for 2024, in terms of military purchasing power parity (mPPP) are now available, thanks to recent updates by SIPRI and IISS.
The data show significant gaps between military spending measured at market exchange rates and military spending estimated in terms of what it can purchase at local prices.
The differences are driven largely by currency undervaluation, in terms of tradable goods, and differences in the costs of non-tradables due to differences in labour costs. These mean that comparing military spending across countries at market exchange rates will typically understate the real purchasing power of a country’s defence budget in middle income and low income economies.
The gap is especially notable for larger spending countries such as China, Russia India and Ukraine. But market exchange rate estimates also appear to underestimate real military spending for many European countries particularly Poland, Italy and Turkey.
Using military PPP adjustments, China’s military spending increases from a market exchange rate estimate of $313b to $567b, which is approximately 57 percent of the USA. China’s slowing economic growth has seen the USA matching China’s military spending growth in recent years, albeit at the cost of a much higher US defense burden.
For further discussion of the trend in China’s military spending see my discussion in VoxEU.
As noted by SIPRI and IISS, and as discussed in this week’s Economist Magazine, Russia’s military spending surged in 2024. In military ppp terms it is now estimated to be approximately $400b, or 34% of the USA. This much larger than the market exchange rate value of $148b.
In nominal terms Russian military spending increased by 49 percent, from 9.3b rubles to 13.8b rubles. In military purchasing power terms the 2024 figure of $400.8b represents a more reasonable, but still very large, 28 percent increase on the previous years figure of $314b. While very preliminary, this suggests part of the nominal spending surge reflects rising costs.
Real military spending for all countries in the sample are given below.
While the data are carefully constructed they are approximations and user discretion is advised. The data are also preliminary estimates will be updated latter in 2024 when more source economic data is released.
Since the data depend on the reporting of defence budgets to the UN, estimates are not currently available for Saudi Arabia, Israel, Pakistan, Taiwan, Kuwait, Iran and Iraq, among others.
A data spreadsheet for 2024 and previous years is also available on the Data Page.
Thanks to SIPRI and IISS for their support.
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