During 2023, the world spent $2.44 Trillion on the military, indicating a 6.8% real growth compared to 2022. According to a report by SIPRI, it was the steepest increase since 2009. The top contributors such as the USA, China, Russia and India continued to drive the growth.
The major drivers of spending were ongoing wars in Ukraine and West Asia. In addition to these, several regional conflicts in Europe and other regions drove the growth of supporting countries.
There is also an impact of anticipation of the China - Taiwan and North-South Korea conflict in future that helps the demand grow.
All these demand-driven reasons have resulted in governments awarding record contracts to suppliers. This has resulted in the value of these companies, such as Lockheed Martin, almost doubling since 2021.
The problem is the trade-off, as long as these wars and military spending increase overall supply of food and energy will remain at risk. This would put inflation and interest rates in an unstable zone for a longer period. Eventually making it difficult for medium and small companies to navigate through smoothly.
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