Russia's defense spending growth slowed sharply in 2025, rising by 3 percent in real terms after a 57 percent surge the previous year, according to the International Institute for Strategic Studies. The country spent a record 186 billion dollars on defense, having tripled military expenditure since 2021, but analysts say financial reforms and economic strain from Western sanctions are constraining further rapid increases.

Despite stagnating growth, widening deficits and falling revenues, Russia continues to devote a larger share of its economy to the war, with defense spending reaching 7.3 percent of gross domestic production. Ukraine allocated 21 percent of its economy to defense. Analysts said there is little indication that Russia’s ability to sustain the conflict into a fifth year has diminished, even as it suffers heavy casualties and higher loss rates following more aggressive offensives.

Across Europe, governments are increasing military budgets in response to the perceived Russian threat, with European members of the North Atlantic Treaty Organization spending an average of 2.16 percent of gross domestic production on defense. Europe now accounts for 21 percent of global defense spending, up from 17 percent in 2022, though fiscal pressures could challenge efforts to meet higher future targets.

Globally, defense spending rose 2.5 percent, reaching its highest share of world economic output since the 2000s. Growth slowed compared with the previous two years as the United States reduced expenditures, although planned increases and continued military expansion in Asia and the Middle East are expected to push global totals higher.