Australian defense expenditure is expected to increase from US$30.9bn in 2020 to US$39.5bn in 2025.This upsurge in the defense budget expenditure is driven by Australia’s redefined strategic priorities in the Indo-Pacific region as tensions rise with China, says GlobalData, a leading data and analytics company.

According to GlobalData’s latest report, ’Australian Defense Market – Attractiveness, Competitive Landscape and Forecasts to 2025’, military expenditure will remain above a 2% GDP share despite the global economic slowdown and pressure of mitigating the impact of COVID-19.

Australian had announced a US$679.4m (AU$1bn) stimulus package to support the domestic defense industry and alleviate the effects of unemployment in August 2020. The government will be providing financial support for the Australian Defence Force reservists, modernization of defense bases and the acceleration of acquisition and sustainment projects, including the Bushmaster-protected mobility vehicles and maintenance for the C-27J aircrafts.

Vera Lin, Associate Analyst of Aerospace and Defense at GlobalData, comments: “The COVID-19 pandemic has caused transformation across the industries including the defense, revealed issues in economic security and reshaped the international economic landscape towards recession. Due to the effective handling of the spread of COVID-19, through border closure, isolation policies and stimulus packages, Australia will be on the road of economic recovery earlier than the rest of the world.”

The government will be investing in programs across maritime, air and land domains. Key platforms include the Attack-class submarine, Hunter-class frigate, Arafura-class offshore patrol vessel, F-35 Joint Strike Fighter, Air launched strike capability, MQ-4C Triton unmanned aerial vehicle, the Boxer reconnaissance vehicle and a new Infantry Fighting Vehicle to replace the M113AS4 Armored Personnel Carrier.

Lin concludes: “China’s military assertiveness in the South China Sea and expansion of spheres of influence in the surrounding region through commercial avenues such as pipelines and ports is supposedly creating a threat for Australia. Hence, Australia is preparing itself for the possibility of conflict with a greater military power, which requires a focus in long-distance deterrence such as ballistic missile defense and investment in hypersonics research.”