Russia defense spending hits 10-year high

Soldiers during military training on March 16, 2015, in Murmansk, Russia.
Anatoly Zhdanov | Kommersant Photo | Getty Images

Russia's defense spending increased at its fastest rate in a decade in 2015, according to IHS Jane's, a year of tense diplomatic relations with the West and fighting in Syria.

The Kremlin boosted its military spending by 21 percent this year to $54.1 billion, making it the fifth largest military budget the world, second only to U.S., China, the U.K. and France, an IHS Jane's Defense Budgets Annual Report showed.

That's about three times the amount spent by Moscow since 2007 in nominal terms, with its defense budget now accounting for 4.3 percent of GDP (gross domestic product).

Start of a rocket from a warship board on Northern navy in Murmansk, Russia.
Russia says fired warning shots at Turkish ship in Aegean to avoid collision

Aside from running newsworthy military drills across the country, 2015 marked the start of Russia's bombing campaign in Syria alongside troops led by President Bashar Assad, reportedly in an effort to quash Islamic State forces.

Meanwhile, regional tensions over Russia's annexation of Crimea and continued influence with separatist forces in eastern Ukraine have spooked Russia's neighbors into bulking up their own military budgets.

IHS Jane's says defense spending in eastern Europe is "set to soar" to around 2 percent of GDP. Aided by Poland's modernization efforts, the region is now the fastest growing region for defense in the world — a title which was last held by the Middle East.

However, fears over Russia's rate of military spending won't last long, IHS Jane's said.

"Russian defense spending was starting to look unaffordable even before 2015's economic and fiscal downturn" Craig Caffrey, principal analyst at IHS, said in the report. "Cuts are now unavoidable as Moscow tries to keep its budget deficit in check."

Russian President Vladimir Putin and Turkish President Tayyip Erdogan at an opening ceremony for the restored Moscow Cathedral Mosque on September 23, 2015.
Turkey preparing to hand over body of pilot to Russia: PM

The Kremlin will see its defense budget drop in real terms in the run up to 2020, the report explained, though spending is still expected to stay above 2014 levels.

But as Moscow is set to cut back, global defense spending is set to rise to $1.68 trillion in 2016, up from a total $1.65 trillion this year, helped by accelerated global growth and heightened security concerns across the West.

NATO, IHS Jane's predicts, will boost its military budget for the first time since 2010 next year.

Correction: A chart previously accompanying this report should have listed the amounts in billions of dollars.