War economies reshape public budgets, industrial production, international trade, and the cost of rebuilding. In 2024, world military expenditure reached $2.718 trillion, while assessments of war damage placed Ukraine’s 10-year recovery needs at $523.6 billion and Gaza’s at $53 billion.
Contents
- Global military spending
- National military burdens
- Arms transfers and wartime supply
- Defense buildups and public finance
- Ukraine’s damage and reconstruction bill
- Gaza’s destruction and economic contraction
Global military spending
The SIPRI report Trends in World Military Expenditure, 2024 records a broad increase in military resources. World military expenditure rose 9.4% in real terms from 2023 to 2024. It was 37% higher in real terms than in 2015, showing that the latest increase sits within a longer upward movement.
Military expenditure equaled 2.5% of world GDP in 2024. The worldwide average was also 7.1% of government expenditure, and military spending averaged $334 per person. These measures describe different dimensions of the war economy: its relationship to total production, public budgets, and population size.
Regional totals show where spending was concentrated:
| Region | 2024 military expenditure | Share or change reported |
|---|---|---|
| Americas | $1.100 trillion | 40% of world total |
| Asia and Oceania | $629 billion | 23% of world total |
| Europe | $693 billion | Up 17% from 2023; up 83% from 2015 |
| Middle East | Estimated $243 billion | Up 15% from 2023 |
The Americas therefore represented the largest regional share in the SIPRI accounting, while Europe recorded the largest stated long-run increase among the regions listed here. The Middle East figure is an estimate for 2024, and its comparison with 2023 is in real terms.
National military burdens
National figures make the difference between absolute spending and economic burden clearer. The United States spent $997 billion on its military in 2024, up 5.7%. China’s estimated expenditure was $314 billion, up 7.0%. Germany’s spending rose 28% to $88.5 billion.
Russia’s estimated military expenditure reached $149 billion in 2024. That was 7.1% of Russian GDP and 19% of government spending. Ukraine’s total military expenditure rose 2.9% to $64.7 billion. Its military burden reached 34% of GDP, the highest recorded by SIPRI among countries measured in 2024.
Israel’s military expenditure surged 65% to $46.5 billion in 2024, equal to 8.8% of GDP. Iran’s military expenditure moved in the opposite direction: it fell 10% in real terms to $7.9 billion. These figures are national measurements for 2024; the Russian and Chinese totals are identified by SIPRI as estimates.
The contrast between spending totals and burdens matters for interpreting wartime economies. A large economy can spend more in absolute terms while carrying a smaller military share of national output. A country directly involved in war may devote a much larger portion of its production and government resources to defense even when its dollar total is lower.
Arms transfers and wartime supply
Military budgets measure spending, but international arms transfers show how equipment moves between suppliers and recipients. According to the SIPRI report Trends in International Arms Transfers, 2025, the volume of international transfers of major arms was 9.2% higher in 2021–25 than in 2016–20.
European demand changed especially sharply. European states’ imports of major arms increased 210% between the two five-year periods, while imports by the 29 current European NATO member states grew 143%. Ukraine received 9.7% of all global imports of major arms in 2021–25, compared with 0.1% in 2016–20.
The regional pattern was uneven. Arms imports increased 12% in the Americas, but decreased 41% in Africa, 20% in Asia and Oceania, and 13% in the Middle East between 2016–20 and 2021–25. These percentages measure changes in the volume of major arms transferred, not the total value of all military goods or the level of military spending.
Supply was concentrated among a small group of exporters. The United States accounted for 42% of global arms exports in 2021–25, up from 36% in 2016–20, and its arms exports increased 27% between those periods. The five largest suppliers—the USA, France, Russia, Germany, and China—accounted for 70% of global arms exports in 2021–25.
North America and Western Europe together accounted for 74% of global arms exports in 2021–25, up from 62% in 2016–20. The 27 current European Union member states alone accounted for 28%. The figures indicate a wartime supply pattern in which European import demand rose substantially while export capacity remained concentrated in North America and Western Europe.
Defense buildups and public finance
The IMF World Economic Outlook, April 2026: Global Economy in the Shadow of War places recent defense expansion in a broader fiscal context. Half of countries worldwide increased their defense-spending budgets during 2020–24. Almost 40% of countries allocated more than 2% of GDP to defense in 2024, compared with 27% in 2018.
The IMF review also reports that real arms sales by the world’s 100 largest arms firms doubled over the approximately two decades covered by its review, from about 2004 to 2024. That long period includes changing security conditions and should not be read as a single-year increase.
Historical fiscal evidence in the IMF review describes the typical defense-spending boom in a panel reaching back to 1946. Such a boom lasted more than two and a half years and raised defense outlays by about 2.7 percentage points of GDP. Approximately 66% of the increase was financed through higher fiscal deficits, and the typical boom worsened the fiscal deficit by about 2.6 percentage points of GDP.
Public debt increased by about 7 percentage points within three years of a typical defense-spending buildup. During wartime booms, public debt jumped by about 14 percentage points of GDP. These are historical panel results, not a forecast for every country. They show why the economic effect of war finance cannot be assessed from military procurement alone: the financing method can shift the burden into future debt service and fiscal constraints.
Ukraine’s damage and reconstruction bill
The World Bank’s Ukraine Fourth Rapid Damage and Needs Assessment (RDNA4) measures the impact from February 24, 2022, through December 31, 2024. It estimates Ukraine’s recovery and reconstruction needs at $523.6 billion over 10 years. That amount was approximately 2.8 times the country’s estimated nominal 2024 GDP.
Direct damage reached $176.1 billion by December 31, 2024. Thirteen percent of Ukraine’s housing stock was damaged or destroyed, affecting more than 2.5 million households. The frontline regions of Donetska, Kharkivska, Luhanska, Zaporizka, Khersonska, and Kyivska accounted for about 72% of total assessed damage.
The largest sectoral needs were spread across essential assets and productive capacity:
| Sector | Estimated 10-year recovery and reconstruction need |
|---|---|
| Housing | Almost $84 billion |
| Transport | Almost $78 billion |
| Energy and extractives | Almost $68 billion |
| Commerce and industry | More than $64 billion |
The needs estimate is a 10-year requirement as assessed at the end of 2024, while direct damage is a measured stock of losses accumulated through that date. Keeping those time horizons separate is important: reconstruction needs include future recovery work, not only the replacement cost of structures already damaged.
Gaza’s destruction and economic contraction
The World Bank report New Report Assesses Damages, Losses and Needs in Gaza and the West Bank assesses impacts from October 2023 to October 2024. It estimates Gaza’s recovery and reconstruction needs at $53 billion.
Damage to Gaza’s physical structures was estimated at about $30 billion during that assessment period. Housing accounted for 53% of total assessed physical damage. Damage to lifeline infrastructure—including health, water, and transport—exceeded 15% of total assessed physical damage.
The assessment also estimated $19 billion in economic losses from reduced productivity, foregone revenues, and operating costs. Managing rubble and debris was estimated to involve 41–47 million tons. These measures capture different economic effects: physical damage concerns assets, while economic losses concern activity and income that were reduced or forgone.
Prices in Gaza rose by more than 300% in one year during the assessment period, and food prices rose 450% in one year. Gaza’s economy was projected to contract 83% in 2024. That contraction is a forecast for 2024, whereas the damage, loss, inflation, and recovery figures describe the assessment period through October 2024.
Together, the Gaza figures show how a war economy can combine destruction of the capital stock, interruption of production, extreme price increases, and a long reconstruction horizon. They should be read as an assessment of Gaza for the specified period, not as a general estimate for every conflict.