Middle East military expenditure holds steady as global defense budgets surge

Global military spending reached a record $2.89 trillion in 2025, but the Middle East saw only marginal growth despite ongoing conflicts and regional rivalries, according to new data released by the Stockholm International Peace Research Institute (SIPRI).

SIPRI found that worldwide defense expenditure rose for the 11th consecutive year, driven largely by sharp increases in Europe (14%) and Asia (8.1%) while military expenditure in the Middle East rose by just 0.1%, reaching an estimated $218 billion.

“Global military spending rose again in 2025 as states responded to another year of wars, uncertainty and geopolitical upheaval with large-scale armament drives,” SIPRI researcher Xiao Liang said.

The five biggest spenders in 2025 were the United States, China, Russia, Germany and India, together accounting for 58% of world military spending, at a total of $1,686 billion.

While the US remained one of the top five, its military spending has continued to  decline steadily, year by year, since 2020. According to the report, it  fell by 7.5% to $954 billion in 2025. Nevertheless, the US spent 2.8 times as much on the military as China, whose spending rose by 7.4% to an estimated $336 billion.

China, the world’s second largest military spender, allocated an estimated $336 billion to its military in 2025, accounting for 1.7%t of China’s GDP in 2025. According to the report, China’s military expenditure has increased every year for 31 consecutive years.

India, the fifth biggest spender worldwide in 2025, increased its military spending by 8.9% to $92.1b., due in part to India’s conflict with Pakistan in May 2025, that pushed up military spending during the year. 

A stable Middle East?

Military expenditure in the Middle East was estimated by SIPRI to be $218b. in 2025, a marginal rise of 0.1% from the previous year but a 36% increase over the past decade.

Despite over two years of continuous warfare, the report found that Israel’s military spending fell by 4.9% to $48.3b. in 2025, a shift SIPRI says is because of the reduced intensity of fighting in Gaza following the January 2025 ceasefire with Hamas. 

But even with the decline, Israel’s defense budget remained 97% higher than the 2022 level, reflecting  the long-term impact of Hamas’ deadly October 7, 2023, attacks and the subsequent significant wars against Hezbollah and Iran.

“Israel continues to invest heavily in air power, missile defense, and emerging technologies, including unmanned systems and cyber capabilities. Those areas are considered key to maintaining Israel’s qualitative military edge in a tense regional landscape,” the report said.

In comparison, a 2020 SIPRI report found that Israel’s military spending was $15.9b. in 2018, a small increase of 0.7% compared with 2017.

Meanwhile, Iran’s military expenditure dropped for the second consecutive year, falling 5.6% in real terms, to $7.4b.. According to SIPRI, the decline was driven largely by inflation exceeding 40%, which eroded purchasing power even as nominal spending increased.

Nevertheless, funding for key domestic arms producers increased sharply in Iran’s military budget for 2025. For example, the report found that allocations to the Iran Aircraft Manufacturing Industrial Company (HESA), which produces military aircraft and drones, increased by 50%, while allocations to the Aerospace Industries Organization (AIO), which produces ballistic missiles, grew by 44%.

However, the report stressed, Iran’s drone and missile programs are often funded using oil revenues, and they are not covered by its official military budget.

“Despite the recent conflicts, Iran’s military spending decreased in real terms due to economic difficulties,” Zubaida Karim, researcher with the SIPRI Military Expenditure and Arms Production Program said. “However, official figures almost certainly understate the true level of Iran’s spending – Iran also uses off-budget oil revenues to finance its military, including the production of missiles and drones.”

Meanwhile, Saudi Arabia’s defense budget rose 1.4% to $83.2b., keeping it among the world’s top 10 military spenders and the top spender in the Middle East. Riyadh continues to modernize its air force, expand missile defenses, and invest in domestic arms production as part of its long‑term strategic transformation.

Turkey also increased its military spending by 7.2% to $30b., driven by military operations in Iraq, Syria, and Somalia. Ankara’s domestic arms industry also continues to be a focus, with allocation to a special fund to support Turkey’s arms industry accounting for 22% of the country’s total military expenditure in 2025.

European defense budget balloons

The Russia-Ukraine war, now into its fifth year, has pushed countries around the world to rearm. 

European defense spending has skyrocketed. EU member states’ investment in defense has reached over  €381b., rising for the 11th consecutive year. Their research and development spending reached almost €20b. in 2025.

According to SIPRI, the total military expenditure in Europe in 2025 reached $864b.billion, an increase of 14% compared with the previous year, marking the highest level of European spending ever recorded by SIPRI.

“The increase reflects the growing geopolitical instability in the region, mainly related to the Russia-Ukraine War and the uncertainty over the US security guarantees for European members of the North Atlantic Treaty Organization (NATO). Military spending by the 29 European NATO member states totalled $559b. in 2025,” the report read.

In June 2025, NATO member states also agreed to raise their military spending target to 5% of their GDP by 2035, a major increase from the previous target of reaching 2% of their GDP by 2024 that had been agreed upon in 2014.

The SIPRI report found that the combined military expenditure of NATO members reached $1581b. in 2025 and accounted for 55% of world military spending.

Russia increased its military spending by 5.9% in 2025 to an estimated $190b., or 7.5% of its GDP, marking the slowest annual rate of growth in military spending by Moscow since the invasion of Ukraine in 2022.

Kyiv, meanwhile the seventh largest spender in 2025, also increased its spending by 20% to an estimated $84.1b., or 40% of its GDP.

“As its invasion of Ukraine has gradually become a war of attrition, Russia has moved towards procuring high volumes of cheaper weapon systems in an attempt to limit operational costs. In particular, Russia’s use of unmanned aerial vehicles (UAVs) has expanded rapidly, partly compensating for earlier losses of more expensive equipment such as aircraft and armored vehicles,” the report said.