Global defense budgets have moved from steady to structural expansion. The last full-year, vetted dataset available shows world military expenditure at roughly $2.24 trillion in 2022.

From that starting point the arithmetic needed to reach $2.5 trillion by 2028 is modest: a compound annual growth rate of roughly 1.85 percent applied to the 2022 base produces $2.5 trillion in nominal terms by 2028. That rate is below the short-term spikes observers saw around major conflicts, but it is more than enough to absorb the multi-year uplift that several large buyer blocs have already signalled. The math is simple, transparent, and useful as a baseline for scenario analysis.

What makes the baseline projection realistic is the concentration of announced and likely increases inside Europe. Consultancy analysis of announced national plans and commitments suggests cumulative additional European defence spending in the order of €700 to €800 billion between 2022 and 2028, with annual European expenditure potentially reaching about €500 billion by 2028. That scale of regional rearmament alone materially shifts the global sum even if other regions only post modest growth.

Layered on top of Europe are enduring upward trajectories in other major spenders. Independent defence-economics assessments and annual compendia from established institutes documented the security shock that began with Russia’s full-scale invasion of Ukraine and that has driven a readjustment of priorities across NATO and beyond. Those analyses show persistent reorientation toward higher defence outlays and capability procurement in multiple regions.

That said, macroeconomic constraints matter. Global growth prospects as of early 2024 were subdued; the World Bank and peers warned that slower GDP growth, tighter financing conditions, and elevated fiscal pressures will constrain discretionary spending capacity in many countries. In practice that creates two forces: pressure to ration or delay some procurement programs and simultaneous political pressure in exposed states to maintain or increase defence spending for deterrence. The net effect is likely to be continued prioritization of defence in national budgets even if nondefense public investment softens.

Putting these pieces together yields three practical scenarios useful to defence contractors, investors, and policy planners:

  • Conservative baseline: 1.8–2.0 percent CAGR from the 2022 SIPRI base yields ~$2.5 trillion by 2028. This path assumes Europe largely follows announced plans but that other regions hold near current levels in real terms.

  • Central case: European uplift consistent with the €700–800 billion cumulative increase, modest growth from the United States and China, and localized surges in the Middle East produce a 2028 global total nearer $2.6–2.7 trillion. This is the most plausible single-year outcome if announced plans translate into execution.

  • Downside shock: a global growth shock or fiscal retrenchment in one or more large economies forces multiyear slowdown in procurement; this could depress the 2028 total back toward $2.3–2.4 trillion despite European increases. World Bank downside scenarios make this tail risk credible.

Operational implications are immediate and technical. Equipment-centric spending will remain the dominant lever for rapid capability increases, and that stresses industrial throughput for munitions, air and missile defence, shipbuilding, and combat aircraft sustainment. Supply-chain bottlenecks and workforce shortfalls are already visible in regional studies and will be the rate drivers that determine how much of announced money converts into fielded capability versus program backlogs. The industry should expect front-loaded demand for dual-use electronics, sensors, and autonomy software that can be integrated faster than heavy platform build programs.

Policy and market conclusions. Hitting $2.5 trillion by 2028 is not an outlier prediction; it is the low-friction outcome once announced European rearmament is paired with modest growth elsewhere. The upside comes from faster-than-expected executions and additional crises that prompt emergency top-ups. The primary downside is fiscal fatigue driven by poor economic growth or competing social spending priorities. For industry that means planning for higher but volatile demand: scale munitions and shipyard capacities, invest in software and electronics assembly lines that can spin up quickly, and assume procurement cycles will favour modular, scalable systems that reduce single-supplier risk.

In short, the $2.5 trillion figure is best read as a near-term policy and industrial planning target rather than a deterministic forecast. The number is reachable with conservative growth on a 2022 base, and plausibly exceeded if Europe and other regions convert announced intent into delivered programs at speed. The difference between $2.5 trillion and $2.7 trillion in 2028 will be decided not by abstract models but by industrial capacity, political will, and the contingencies of conflict and crisis.