In this article, we look at the military spending by country and create a list of the top 20 NATO countries that spend the highest on defense expenditure. To skip our detailed analysis, head directly to NATO Military Spending by Country: Top 5 Countries.
Global military spending has reached a record high with $2.2 trillion spent on defense expenditure in 2022, with Europe seeing its steepest rise in 30 years amid Russia’s invasion of Ukraine. The three largest military spenders, the United States, China, and Russia, accounted for 56% of the world total. Military spending from NATO members increased by 0.9% from 2021, to a total of $1.2 trillion in 2022. These statistics were published by the Stockholm International Peace Research Institute (SIRPI) in April this year.
The surge in spending has created a boom for the armament manufacturing industry. Lockheed Martin Corporation (NYSE:LMT) reported net sales of $66 billion and a net profit of $5.7 billion in 2022. Raytheon Technologies Corporation (NYSE:RTX)’s net earnings for the year ended March 2023 were $14.1 billion – an increase of 8.90% from last year. Northrop Grumman Corporation (NYSE:NOC) also announced that its profits in 2022 had risen by 2.5% compared to 2021. The revenues of General Dynamics Corporation (NYSE:GD) and BAE Systems plc were also significantly higher than in the preceding year.
NATO, the North Atlantic Treaty Organization, is an intergovernmental alliance between 31 countries with an integrated military command structure. 29 of its members are European, while two of them are North American. The alliance is sourced through direct and indirect contributions of members. NATO does not have its own armed forces. Members commit troops and equipment on a voluntary basis. There is no obligation for allies to contribute, unless Article 5 of the treaty is invoked, which calls for collective defense.
NATO’s 2% Defense Expenditure Goal
Defense Ministers of NATO countries in 2006 agreed for their countries to commit at least 2% of their GDP on defense expenditure. This decision was made to ensure NATO’s military readiness. By 2014, only three allies were meeting this goal. That number is now up to seven. The change has been driven by calls from the United States urging allies to increase defense spending by country to meet NATO’s target.
The United States is the biggest military spender in the world. According to a report released by NATO this year, the U.S. is estimated to have spent more than $821 billion on defense expenditure in 2022 – the highest amount in the world, which is close to 40% of all global spending on defense in that year, and nearly three times higher than the amount spent by China, the world’s second biggest military spender.
Another significant factor behind more NATO members increasing military spending is that European governments are actively taking measures to strengthen their defense following Russia’s annexation of Crimea in 2014, and the invasion of Ukraine in 2022. This is discussed in detail in our article, 20 Strongest Militaries in Europe. Germany, for instance, has announced to commit $112 billion to a special fund to bolster its armed forces and meet NATO’s spending target of 2% over the next few years. German lawmakers approved an order for 35 F-35A fifth-generation fighter jets from Lockheed Martin Corporation (NYSE:LMT), with the first set of planes set to arrive in 2027. This is one of the series of contracts, worth $13.8 billion, that were approved by the parliament last year.
While governments that are part of NATO are taking steps to increase their military spending as share of GDP, only seven countries are meeting the target of 2%, and a vast majority are falling well below the goal. Luxembourg (0.62%), Spain (1.09%), Belgium (1.18%), Slovenia (1.26%), and Canada (1.29%) make the bottom of our list of military spending by country for NATO members. These are the NATO countries that spend the least share of their GDP on defense, considering that Iceland does not have a military and therefore, its spending is negligible. Türkiye, which has the second largest standing army in NATO, also spends a mere 1.37% of its GDP on defense and does not make the top 20 list.
NATO’s Military Spending in Ukraine
Members of NATO have been aggressively arming Kyiv to resist Russian advances. The United States is the largest NATO contributor to Ukraine, having spent $46.6 billion as of February 2023 in military assistance, according to data shared by the Council on Foreign Relations. By December 2022, Lockheed Martin Corporation (NYSE:LMT) had missile orders worth $950 million from Pentagon to refill stockpiles in Ukraine.
Much of this amount was dedicated to the production of HIMARS and GMLRS. Earlier in the same year, Raytheon Technologies Corporation (NYSE:RTX) had been awarded a $624 million contract to build 1,300 stinger missiles for Ukraine. In January 2023, the U.S. announced to send 31 M1 Abrams tanks built by General Dynamics Corporation (NYSE:GD) in fresh military assistance to Ukraine.
The United Kingdom is the second largest NATO contributor to Ukraine with over $7.5 billion pledged in military funding, followed by Germany at third. The UK announced to send 14 of its Challenger 2 tanks, while Germany said it would send 88 Leopard tanks to aid Ukraine’s fight against Russia.
NATO’s 2023 military budget is $2.1 billion dollars. The United States, United Kingdom, and Germany have pledged to contribute nearly half of it – 43.9% to be precise. NATO’s chief has urged member nations to increase their share of military spending to at least 2% of the GDP.
Methodology
We have ranked the top 20 list of military spending by country for NATO members by sorting them based on countries’ defense spending as percentage of GDP. This metric is directly aligned with NATO’s requirement of countries having to spend at least 2% of their GDP on defense. The list has been prepared using data released by NATO this year on the estimated defense expenditures incurred by its members in 2022. Countries that had the same percentage of defense spending as share of GDP in 2022 were sorted based on their spending shares in the previous year. A country whose share had increased this year relative to last year outranked the country whose share of spending had decreased this year compared to last year.
NATO Military Spending by Country: Top 20 Countries
Photo by Kevin Schmid on Unsplash
Let’s look at the top 20 NATO countries with the highest military spending as a percentage of their GDP.
20. Denmark
Military spending as share of GDP: 1.38%
Denmark is a Scandinavian country which only spends 1.38% of its GDP on defense expenditure. The government has announced to spend about 21 billion euros in the next ten years to meet NATO’s military spending by country target of 2%. Denmark is home to Terma Group, a company that produces defense systems such as command and control, radars, space technology, and aircraft self-protection systems. In 2022, it went into a contract with Northrop Grumman Corporation (NYSE:NOC) to cooperate on electronic warfare training opportunities in Northern Europe.
19. Hungary
Military spending as share of GDP: 1.44%
The Hungarian government announced in June 2022 to raise its defense spending from $3 billion per year to $4.5 billion for 2023. Hungary has been taking active measures since 2019 to increase its military spending as percentage of GDP, which currently stands at a paltry 1.44%. In 2022, Hungary signed a deal with Raytheon Technologies Corporation (NYSE:RTX) to purchase air defense missiles worth $1 billion – which was Budapest’s largest defense procurement ever from the United States.
18. Germany
Military spending as share of GDP: 1.49%
According to NATO statistics, Germany is estimated to have spent only 1.49% of its GDP on defense in 2022. However, the government in Berlin is considering a written pledge to NATO for increasing its defense spending to at least 2% of the GDP. Germany has also committed itself to contributing 319 million euros to NATO’s 2023 military budget. Germany and United States, together, will be making up over 30% of the total budgetary amount of 1.96 billion euros.
17. Italy
Military spending as share of GDP: 1.51%
Italy is the 11th largest spender on military in the world in terms of monetary value, with a defense expenditure of $32 billion in 2022. However, this is only 1.51% of its GDP, which is over $2 trillion. Italy is fourth on the list of the 20 Strongest Militaries in Europe. Its air force has a fleet of 14 F-35 fifth-generation fighter jets and has placed an order with Lockheed Martin Corporation (NYSE:LMT) worth $524 million in 2022 for another 18 of these jets. On the naval side, it boasts 2 aircraft carrier warships – the Giuseppe Garibaldi and Cavour.
16. Bulgaria
Military spending as share of GDP: 1.54%
Bulgaria is estimated to have spent 1.54% of its GDP in 2022 on defense expenditure. According to a survey held by NATO this year, 83% of Bulgarians are in favor of their country increasing its military spending. The country is a key ally of the United States, which has spent over $238 million in military assistance to Bulgaria over the last five years. Eastern Europe’s first command and control center was built in Sofia, Bulgaria in 2004 by Northrop Grumman Corporation (NYSE:NOC).
15. Norway
Military spending as share of GDP: 1.57%
Norway’s military spending as percentage of GDP touched NATO’s 2% target in 2020 but has plummeted down to 1.57% in 2022 – the lowest since 2015. Russia’s invasion of Ukraine has, however, forced a rethink, with the country’s prime minister announcing to raise defense spending to 2% of the GDP by 2026. In November last year, the Norwegian government entered a contract with Lockheed Martin Corporation (NYSE:LMT) for its TPY-4 radars to boost its national defense.
14. Albania
Military spending as share of GDP: 1.57%
Albania had the same defense spending as share of GDP as Norway did in 2022 but outranked the latter due to its consistent growth in defense spending over the last few years. Barring a fraction of a dip in 2021, Albania’s spending has grown from 1.10% of the GDP in 2016 to 1.57% of the GDP in 2022. The country’s defense minister in May 2022 announced that his country had bought anti-tank javelin missiles from Lockheed Martin Corporation (NYSE:LMT) to strengthen the army. The cost and quantity were not disclosed.
13. North Macedonia
Military spending as share of GDP: 1.61%
North Macedonia is another country that is on upward trajectory as far as meeting NATO’s military spending by country target of 2% is concerned. Its military spending as share of GDP has consistently grown from 0.89% in 2017 to an estimated 1.61% in 2022. According to a report in Janes, the government in Skopje has approved a budget of $292 million for defense in 2023, with the aim of modernizing the armed forces.
12. Netherlands
Military spending as share of GDP: 1.64%
The Dutch government announced in late 2022 that it would be spending nearly $3.5 billion in military procurement in wake of Russia’s invasion of Ukraine. This will not only help the Netherlands strengthen its defense, but is also expected to take its military spending share as percentage of GDP to above 2% by 2024.
11. Romania
Military spending as share of GDP: 1.75%
Romania spent over 2% of its GDP on defense in 2020. That share is estimated to have dropped in 2022. However, the government is determined to increase military spending amid the ongoing Russia-Ukraine war. A senior official announced in March this year that Romania plans on submitting a request to the United States in 2024 for procurement of Lockheed Martin Corporation (NYSE:LMT)’s F-35 fighter jets. The parliament has also approved the purchase of 54 used M1A2 Abrams tanks, manufactured by General Dynamics Corporation (NYSE:GD), from the United States.
10. Slovak Republic
Military spending as share of GDP: 1.76%
Slovak Republic, also known as Slovakia, is the tenth biggest spender on military in terms of share of GDP. It is estimated by NATO to have spent 1.76% of its GDP on defense spending in 2022. This includes a $1.37 billion deal for the delivery of 152 infantry fighting vehicles from BAE Systems plc. The Slovakian government aims to achieve NATO’s 2% defense spending target in 2024.
9. France
Military spending as share of GDP: 1.89%
France is one of the strongest militaries in the world, and Europe’s largest in terms of manpower. You can read more on it in our list of the most powerful militaries in the world in 2023. In 2022, France is estimated to have spent 1.89% of its GDP on military spending. French president Emmanuel Macron, this year in January, announced to raise France’s budget for 2024-2030 by 40% to get the armed forces ready for the possibility of high-intensity conflicts. Bloomberg reported recently that French aerospace group, Safran, is in talks with Raytheon Technologies Corporation (NYSE:RTX) to buy one of its flight control units for about $1 billion.
8. Croatia
Military spending as share of GDP: 1.91%
Croatia spent 1.91% of its GDP on defense expenditure in 2022. In December that year, the government approved procurement of French air defense system, Mistral, for $75 million. This deal followed last year’s purchase of Rafale jets from France worth over $1 billion, after an initial interest in Lockheed Martin Corporation (NYSE:LMT)’s F-35 fighter jets.
7. Latvia
Military spending as share of GDP: 2.07%
We are now onto countries that met NATO’s military spending target in 2022. Latvia is one of the top NATO military spenders. It is one of the seven countries that is estimated to have spent over 2% of its GDP on defense. The country’s spending ratio was a paltry 0.94% in 2014 according to statistics released by NATO. However, in the last few years, the government has increased funding to equip the military with sophisticated weapons to strengthen national security. In June this year, Northrop Grumman Corporation (NYSE:NOC) announced that it had modernized Latvia’s air defense capabilities. The project was funded by the U.S. government for three Baltic countries, Latvia, Estonia, and Lithuania for $14.3 million.
6. Estonia
Military spending as share of GDP: 2.12%
Estonia borders Russia to its east. It is estimated to have spent 2.12% of its GDP on defense in 2022. Prime Minister Kaja Kallas announced in April this year that her government plans to raise military spending to 3% of the GDP for 2024-2027. The country’s military spending has been above NATO’s target consistently since 2015. BAE Systems plc in 2017 signed a contract with the Estonian government to support its fleet of infantry fighting vehicles, the CV9035.
