In response to growing global uncertainty and rising geopolitical tensions, the Canadian Armed Forces are poised to receive financial support for modernization and expansion.
Canada’s commitment to international security and its evolving role on the world stage has prompted increases in the defense budget for the Canadian Army, Royal Canadian Navy and Royal Canadian Air Force. GlobalData’s report, Canada’s Defense Market 2023–2028predicts growth of US$2.4 billion ($3.32 billion) from 2024 to 2028, reflecting a steady compound annual growth rate (CAGR) of 2.7% during this period.
This increase continues Canada’s historical trend, where the defense budget saw a more significant CAGR of 4.5% from 2019 to 2023, increasing by $3.3 billion.
The development guides
The increase in defense spending can be attributed to several key factors. A key driver is Russia’s resurgence on the world stage, characterized primarily by its incursion into Ukraine in 2022.
This international event, combined with continued modernization in the Canadian Armed Forces and the need to support operational deployments around the world, contributed to the budget expansion.
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From GlobalData
Defense market size
In recent years, Canada has increased its defense spending from $17.2 billion in 2019 to $20.6 billion in 2023, showing a CAGR of 4.5% over the period 2019–23.
Although facing a brief contraction in 2020-2021 due to political and economic uncertainties, Canada has reaffirmed its commitment to a strong defense strategy, which is further strengthened by shifting global dynamics. The defense budget is projected to grow at a CAGR of 2.7% from 2024 to 2028.
The increase in defense spending primarily supports projects within the Air Force and Navy, including procurement 88 F-35A stealth fighters and construction of 15 frigates.
Key drivers of defense spending
Canada’s strained relationship with Russia has roots in Russia’s actions, such as its 2014 annexation of Crimea and its 2022 invasion of Ukraine. As a strong supporter of Ukraine, Canada has provided military training and equipment to bolster Ukraine’s defenses.
Beyond Ukraine, Canada maintains security concerns in the Baltic states, resulting in troop deployments to support NATO allies.
As an Arctic nation, Canada is also closely monitoring developments in the Arctic region, where Russia has increased its military presence. The effects of climate change, the opening of Arctic routes for trade and resource exploration, further reinforce the importance of Arctic security.
Canada’s unique geographic position with territories on both the Atlantic and the Pacific requires a dual focus in both regions. China’s emergence in the Indo-Pacific region poses challenges, prompting Canada to join the Inter-Parliamentary Alliance on China and work with China’s neighbours, who share concerns about its expansion.
Tensions have escalated since Canadian military patrol boats were harassed by Chinese aircraft off the coast of North Korea in June 2022.
In addition to great power competition, Canada continues to face threats from extremist terrorism. Canadian Special Forces are actively involved in countering terrorist networks, and the nation is emphasizing counter-radicalization efforts while working with allies to prevent large-scale attacks.
Recognizing the impact of climate change on global security, Canada has adjusted its defense strategy accordingly.
Melting ice, rising sea levels, extreme weather and humanitarian crises have led to the need for increased Coast Guard and Navy patrols in the north. The indirect impact of climate change on global instability further affects the defense landscape.
Canada’s defense strategy, aptly named ‘Strong, Secure, Engaged’, is complemented by the Future Force Design initiative which aims to upgrade military platforms, improve multi-domain C4ISTAR networks, improve lethality and embrace unmanned systems and artificial intelligence. Modernizing the North American Aerospace Defense Command (NORAD) is among the priorities.
Canada’s defense spending as a percentage of its gross domestic product remains below the NATO target of 2%. The current forecast does not see this target being met until 2028, with the defense budget expected to hover around 1.04% of total spending. However, the per capita defense budget increased from $457.8 in 2019 to $522.5 in 2023, with an expected rise to $557 by 2028.
Canada maintains relations with organizations such as NATO, the Five Eyes alliance, the EU and the US. Its membership of the Arctic Council reflects its commitment to the Arctic region, and the Canada-US alliance is evident through partnerships such as NORAD and the Permanent Joint Defense Council.
Political, social and economic factors
Canada’s political orientation, commitment to multilateral engagement, domestic politics, cultural values, social priorities and economic stability shape its defense policy. Economic challenges and resource development in the Arctic region also affect Canada’s defense planning.
Canada’s defense landscape is evolving in response to global dynamics and its commitment to maintaining a modern, flexible military.
Read the original at Defence247.gr
