Emerging global powers China and India are set to drive stronger defense spending over the next decade, according to a new report released by IHS Markit.
Global military spending rose in 2016 to $1.57 trillion and annual budgets should return to pre-financial crisis levels by 2018.
There is now a risk of an arms race as Asia Pacific nations increase their military spending as they move their focus from territorial defense to power projection, analysts believe.
"This is new for the region and is likely to increase military-to-military contact between states," Craig Caffrey, principal analyst at IHS Jane's, said in a release Monday.
"Rising defense spending could therefore be indirectly responsible for increased tension within the region which in turn could spur faster budget growth," he said.
IHS said China's defense budget is on track to almost double within 10 years, from $123 billion in 2010 to $233 billion by 2020.
At that 2020 level, China's defense budget would be about four times bigger than the UK's and more than the combined spending of Western Europe.
For its part India spent more than $50 billion on its military might in 2016, pushing Russia out of the top five biggest spenders.
The South Asian country is in the grip of a modernization drive and is tipped to leap past the U.K. into third spot by 2018, should sterling remain at relatively weak levels.
Caffrey said procurement spending has recently been constrained by rising personnel costs but that is set to change.
"India needs new equipment to fulfill its modernization drive. Over the next three years, India will re-emerge as a key growth market for defense suppliers," he said.