Continuing downfalls or slower increases in economic activity in the world today represent a delayed reaction to the global financial and economic crisis that broke in 2008. In Europe, governments began to address soaring budget deficits, having previously enacted stimulus packages in 2009. Cuts were particularly substantial in the smaller, more vulnerable economies of Central and Eastern Europe, as well as those with particular budget difficulties such as Greece.
Asia presents a somewhat different case: most economies did not experience recession in 2009, but economic growth slowed, while military expenditure continued to increase quite rapidly. Thus, the slower increases in 2010 represent to some extent a ‘rebalancing’ with economic growth. The Chinese Government explicitly linked itssmaller increase to China’s weaker economic performance in 2009.
The rate of increase in US military spending slowed in 2010, to 2.8 per cent in real terms compared to an annual average increase of 7.4 per cent between 2001 and 2009.
However, the USA continues to be exceptional in terms of its military spending. As well as being overwhelmingly the largest spender in absolute terms, with 43 % of the global total, six times its nearest rival China, it has led the way in the global increase since 2001, with an 81 per cent rise in real terms compared to 32.5% in the ‘rest of the world’. Moreover, the share of US GDP devoted to the military—the ‘military burden’—has increased sharply, from 3.1 per cent in 2001 to an estimated 4.8% in 2010, while in the majority of other worldwide the military burden has fallen or remained steady. Of those countries for which SIPRI has reliable data, the USA is likely to have had the highest military burden outside the Middle East in 2010, based on IMF projections for GDP.
Even in the face of efforts to bring down the soaring US budget deficit, military spending continues to receive privileged treatment. President Obama’s FY2012 budget announced a 5-year freeze on non-security-related discretionary expenditure, but military spending, along with other security spending such as intelligence and Homeland Security is exempt. Such cuts as may occur are likely to be due to the end of the US troop presence in Iraq and the gradual drawdown from Afghanistan, rather than to cuts in the ‘base’ defence budget. Taken together, these figures suggest that the USA continues to prioritize maintaining its overwhelming military power as the basis of its security and status. Projections from the White House Office of Management and Budget (based on the US Administration’s Defense Budget Requests for Fiscal Year 2011 and 2012) show another large increase in outlays in 2011, followed by a decrease in 2012—the latter resulting from the withdrawal of US forces from Iraq—but with spending still about 4% higher in real terms in 2012 than in 2010. However, ongoing budget disputes between the administration and the Congress mean that the picture for 2011 and 2012 is highly uncertain.