Business Environment Profiles - Canada
Published: 31 May 2024
Government funding for defense
25 $ billion
5.5 %
This indicator measures federal spending on defense, which Statistics Canada defines as any expenditure on the military, civil defense, foreign military aid, research and development pertaining to the military, in addition to other relevant items. Data for this report is sourced from Statistics Canada and is presented in constant dollars.
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Over the five years to 2024, federal spending on defense is projected to increase at an annualized rate of 5.5%, reaching $25.1 billion. Defense spending in Canada has remained relatively constant, having stayed below 2.0% of GDP for more than a decade. In 2014, each NATO member nation agreed to spend 2.0% of its GDP on defense. However, Canada has consistently missed the benchmark. Despite not reaching 2.0% of GDP, defense spending as a share of GDP has trended upward, though only slightly from 1.2% in 2015 to 1.3% in 2019. In 2020, defense spending increased during the COVID-19 pandemic, providing for an uncharacteristic surge in growth. In 2021, defense spending continued to expand due to GDP growth during the period. In early 2022, Ukraine was invaded by Russia. This spurred a NATO response for its members to increase defense expenditure. However, it is anticipated that Canada will stay below the 2.0% despite NATO's expected target defense spending to GDP ratio of 2.0%.
Over the next five years, IBISWorld estimates that defense spending will increase at an annualize...
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