Defense Spending – Shifting Into a Higher Gear

Asia's defense spending is accelerating significantly, with projections suggesting it could reach US$1.2 trillion as governments increase budgets to address geopolitical tensions. This trend acts as a major driver for an ongoing industrial and capital expenditure super-cycle in the region.

Key Takeaways

• 1.Asia's defense spending CAGR increased to 6.6% over 2022-26, reaching approximately US$700bn in 2026.
• 2.Policy makers are committing to higher defense spending as a % of GDP, with potential for total spending to reach US$1.2 trillion.
• 3.Increased defense spending is a key pillar of Asia's industrial and capex super-cycle.

Table of Contents

• Why defense spending has inflected higher
• Two reasons why defense spending is rising
• Outlook and implications
• Will there be challenges to accelerating defense spending?

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