In this article, we look at the NATO spending by country per capita and list the top 15 countries. You can skip our detailed analysis on the increase in defense expenditure by NATO’s European members after Russia’s invasion of Ukraine, and head over directly to NATO Spending by Country Per Capita: Top 5 Countries.
Moscow’s assault on Ukraine in 2022 sent shockwaves across Europe, signaling the return of war to the continent after decades of peace. Finland and Sweden are the latest countries to join NATO following the start of the war, while several other countries across the region are actively racking up their military expenditure to bolster national defense.
Global defense spending reached a record high of $2.2 trillion in 2022, according to the Stockholm International Peace Research Institute (SIPRI), with Europe witnessing its steepest rise in 30 years, having spent $480 billion in military expenditure during the year. NATO’s defense spending in 2022 was also 0.9% higher than in 2021, totaling $1.2 trillion. Final, aggregated figures for 2023 are still awaited, however, another recent report by SIPRI noted a 94% increase in arms imported by European countries between 2019-2023, compared to the previous five-year period from 2014-18. The United States was the origin of 55% of the arms procured by Europe in the last five years.
The surge in military expenditure amid growing calls from the United States and NATO for members of the treaty to meet the expectation of spending at least 2% of their GDP on defense has created a boom in the armaments and aerospace industries. Lockheed Martin Corporation (NYSE:LMT)’s full-year financial statements for 2023 reported a 2.4% increase in revenue compared to the previous year to total $67.6 billion. The company’s net profit has also grown from $5.7 billion in 2022 to $6.9 billion in 2023.
NATO members are actively pursuing measures to upgrade their fleet of fighter jets, by replacing aging aircraft with newer, advanced fighters – most notable of which is Lockheed Martin Corporation (NYSE:LMT)’s F-35. Last year, Canada announced it was buying 88 of these fifth-generation fighter jets to enhance Arctic security and also get closer to NATO’s spending expectations. Earlier in December 2022, Berlin also clinched a $8 billion deal with the United States to procure 35 F-35 fighters, with the first set of planes set to be delivered in 2027.
Lockheed Martin Corporation (NYSE:LMT)’s stock price has risen more than 9% since Russia’s invasion of Ukraine in 2022. RiverPark Advisors made the following comment about the company in its Q3 2023 investor letter:
LMT is the world’s largest aerospace and defense contractor. With about 70% of its $66 billion in revenue from the U.S. government, the company is well positioned to benefit from U.S. defense budget growth, historically 5%-6% per year, as well as increased global military spending. With a $158 billion backlog and almost 30% of its revenue coming from building F-35 aircraft with deliveries forecast to reach 180 per year (up from 141 in 2022) in the coming years, we believe the company could grow at a higher rate than overall defense budget growth and Street expectations over the next several years. Further, strategic acquisitions, debt repayment, a 2.9% dividend yield, and continued share buybacks from more than $6 billion per year of free cash flow should lead to even greater shareholder returns. We re-initiated a small position in August.
RTX Corporation (NYSE:RTX)’s figures are also soaring. The company generated revenues of $68.9 billion in 2023, a year-on-year increase of 3%, with contracts continuing to flow to the company from NATO countries seeking to enhance national security. This week, RTX Corporation (NYSE:RTX) was awarded a $1.2 billion contract to develop and supply Germany with Patriot air and missile defense systems.
Hungary also boosted its aerial security in November 2023 after it received delivery of the first two units of the NASAMS air defense system from RTX Corporation (NYSE:RTX) and Kongsberg Defence & Aerospace. According to a report in Bloomberg, the American defense conglomerate is also in talks with French aerospace company Safran, with the latter showing interest in RTX Corporation (NYSE:RTX)’s flight control units.
Northrop Grumman Corporation (NYSE:NOC) on the other hand generated $39.3 billion in sales in 2023, at a 7% increase in comparison to 2022. The company reported impressive growths in its aeronautics, defense, mission, and space systems. Projecting a sustained demand for its weapons in 2024, Northrop Grumman Corporation (NYSE:NOC) has forecasted $41 billion in revenue for this year. Its share price has increased 16% since the beginning of the conflict in Ukraine.
The company, in June last year, modernized the air defense capabilities of Latvia, Lithuania, and Estonia under a $14.3 million fund provided by the US. Northrop Grumman Corporation (NYSE:NOC) is also cooperating with Terma, a Danish company, on electronic warfare training in Northern Europe.
NATO Spending by Country Per Capita: Top 15 Countries
Methodology
We have listed the top 15 NATO countries in ascending order of their estimated military spending per capita in 2023. Data has been sourced from NATO’s July 2023 press release titled Defence Expenditure of NATO Countries (2014-2023). In the case of two or more countries having the same expenditure per capita, we gave a higher ranking to the country that was spending a greater percentage of its GDP on defense.
By the way, Insider Monkey is an investing website that tracks the movements of corporate insiders and hedge funds. By using a similar consensus approach, we identify the best stock picks of more than 900 hedge funds investing in US stocks. The top 10 consensus stock picks of hedge funds outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). Whether you are a beginner investor or professional one looking for the best stocks to buy, you can benefit from the wisdom of hedge funds and corporate insiders.
Let’s now head over to the list of NATO spending by country per capita.
NATO Spending by Country Per Capita: Top 15 Countries:
15. Italy
Military Spending Per Capita: $484
Italy’s GDP was estimated to be $2.19 trillion in 2023 by the IMF, with over $33 billion incurred on military expenditure, which was equivalent to 1.46% of its GDP. According to NATO, Italy’s estimated per capita military spending for 2023 is $484.
14. Belgium
Military Spending Per Capita: $502
Belgium has the second lowest percentage of GDP spent on defense among all NATO members, measured at 1.13% last year. Despite that its military spending per capita is above $500. This figure is likely to rise as Brussels plans on increasing its military expenditure to 1.54% of the GDP by 2030.
13. Estonia
Military Spending Per Capita: $578
Estonia borders Russia to the East. The country’s military spending has continuously (since 2015) been above NATO’s 2% target for member states. Last year, Estonia allocated 2.73% of its GDP on defense expenditure – the fourth highest in NATO. The per capita military spending in Estonia has increased by nearly 75% over the last decade, from $328 in 2014 to $378 in 2023.
12. Canada
Military Spending Per Capita: $622
Canada boasts one of the most powerful militaries in the world. The country spent $28.9 billion on defense in 2023, which amounted to 1.38% of its GDP. In March this year, Canada announced $1.3 billion in defense spending cuts over the next three years, which is likely to reduce the country’s military spending per capita.
11. Greece
Military Spending Per Capita: $622
Greece’s defense spending soared from $5.2 billion in 2014 to $8.5 billion in 2022, before dropping slightly to $7.1 billion last year. Despite the dip, it has the third highest share of military spending as a share of the GDP (3.01%), and is among countries with the highest military spending per capita in NATO.
10. Poland
Military Spending Per Capita: $657
Poland had the highest percentage of military spending as a share of the GDP (3.9%) in 2023 among NATO members. This is a significant jump from 2.42% in 2022. As a result, since 2022, the country’s military spending per capita has more than doubled from $325 in 2020 to $657 now.
9. Germany
Military Spending Per Capita: $677
Germany is on ninth spot in our list of NATO spending by country per capita. However, the country has consistently remained under target as far as NATO’s 2% spending goal is considered. Last year, it only spent 1.57% of the GDP on defense. In February, the government pledged to meet NATO’s goal by next decade, and stated that its defense spending could rise up to 3.5% of the GDP by then.
8. France
Military Spending Per Capita: $737
France boasts one of Europe's strongest and largest militaries, and spent 1.9% of its GDP on defense expenditure in 2023. Last January, French president Emmanuel Macron announced to raise the country’s military budget by 40% for 2024-2030 to enable the French military to be combat ready, amid the volatile situation in Ukraine. This move is likely to increase the country’s military spending per capita, which has grown by a meager 5% since 2019 ($700).
7. Luxembourg
Military Spending Per Capita: $773
Luxembourg has the lowest contribution of military spending as a share of the GDP in NATO (0.72%), but it is among countries with the highest spending per capita in the alliance. One factor for that is its tiny population of 640,000. Having said that, the country deserves credit that despite its small size, it has more than doubled its defense spending from $250 million in 2015 to an estimated $609 million in 2023, with its per capita military spending increasing 76% in this time period.
6. Netherlands
Military Spending Per Capita: $848
The Netherlands is in sixth position in the list of NATO spending by country per capita, with $848 being spent per head in the country on defense expenditure. In 2023, the Dutch government is estimated to have spent 1.7% of its GDP on military expenditure. With its economy crossing the $1 trillion mark, Amsterdam can look to further increase military spending to meet NATO’s 2% goal.
