Russia increased its military spending by 24 percent last year, reaching USD 109 billion, which accounts for 5.9 percent of its GDP.

New Delhi: In a major boost to Russia’s economy, the country’s leading defence companies witnessed a substantial 40 percent spike in revenue last year. The defence companies of United States and other European countries, on the other hand, recorded modest growth of only 2.5 percent and 0.2 percent. The Stockholm International Peace Research Institute (SIPRI) has revealed the facts in its latest report.

While challenges are mounting for the Western nations, the findings indicate how Russia has been significantly enhancing its strength amid the Ukraine war. According to the report, the global defense industry’s average revenue growth in 2023 was 4.2 percent.

However, Russia has effectively ramped up its defense production under wartime conditions. To support its war efforts in Ukraine, Russia is accelerating weapons manufacturing, whereas NATO and Western nations are struggling to keep pace.

Russia’s Rising Revenue, Worrying for Western Nations

The total revenue of Russia’s top defense companies was USD 25.5 billion, which is significantly lower than the United States (USD 317 billion) and Europe (USD 133 billion), according to a Al Jazeera report. Despite this, Russia has effectively prepared its economic and industrial resources for war.
The two major Russian companies, Rostec and United Shipbuilding Corporation, are included in the top 100 defense companies, as per SIPRI report. Since its annexation of Crimea in 2014, Russia has kept its defense production under wraps, preventing the world from gaining much insight into it.

Impact of Russia’s War Economy

Russia increased its military spending by 24 percent last year, reaching USD 109 billion, which accounts for 5.9 percent of its GDP. NATO countries’ average defense, on the other hand, spending is 1.9 percent. The report indicates that nearly 40 percent of Russia’s economic growth has come from the defense industry. In 2024, Russia’s defense and security budget rose by 70%, reaching $157 billion, and this growth is expected to continue until 2027.

Western countries face challenges

US defense companies have been grappling with supply chain issues. For example, Lockheed Martin, the world’s largest defense equipment manufacturer, saw a decline in revenue for the third consecutive year. Companies like RTX (formerly Raytheon) are also struggling with similar problems.