Countries spending more on ‘instruments of war than on investments in peace’: UNWESP Report-2026

By R Anil Kumar

New York/Bengaluru, January 8, 2026. Even as President Donald Trump called for a more than 50 per cent increase in the US’ military budget, United Nations Secretary-General António Guterres warned that increasing expenditure on arms and ammunition by governments across the world was taking away money from social spending, with global growth remaining “subdued, far below pre-pandemic levels”.

“Strategic rivalries are eroding multilateralism and fragmenting markets, leading to disruptions in global trade and investment,” Guterres wrote in the UN’s World Economic Situation and Prospects report for 2026, released Thursday, January 8. The report is prepared by the UN’s Department of Economic and Social Affairs (DESA) in partnership with other UN entities.

“Heated competition for critical minerals is preying on weak governance and social cohesion, driving uncertainty and division across affected communities. And rising military expenditure is diverting scarce resources away from social spending, as countries spend more on instruments of war than on investments in peace.” Guterres has started.

The Secretary-General’s warning comes on the heels of Trump posting on social media platform Truth Social that he had held discussions with American lawmakers and “determined that…our Military Budget for the year 2027 should not be $1 Trillion Dollars, but rather $1.5 Trillion Dollars”. The US President added that revenue being generated by the tariffs imposed by America allowed for such a military budget. The US Congress has approved a budget of $901 billion for 2026.

According to the UN report released on January 8, the increase in global military expenditure in 2024 to $2.7 trillion reflects “the steepest annual increase since at least 1988”. The rise has been driven by the world’s 10 largest spenders, which make up nearly 75 per cent of the total, the UN said.

This defence expenditure jump, the organisation warned, threatens to divert money from long-term investment in human capital, infrastructure, and development cooperation with vulnerable economies.

In terms of growth, the UN on Thursday upgraded its growth forecast for India for the 2026 calendar year by 20 basis points (bps) to 6.6 per cent, with growth seen picking up pace slightly in 2027 to 6.7 per cent. For calendar year 2025, the UN has estimated India’s growth rate at 7.4 per cent — the same as the Indian government’s first advance estimate for the fiscal year ending March 2026.

The Indian Statistics Ministry’s first advance estimate of 2025-26 GDP implies growth will slow down to 6.9 per cent in the second half of the fiscal from 8 per cent in the first.

Growth in India is seen supported by “resilient consumption and strong public investment”, which the UN expects to “largely offset” the hit from the US tariffs. “Recent tax reforms and monetary easing should provide additional near-term support,” the global organisation added.

However, if the 50 per cent US tariff persists, it could weigh on export performance in 2026 due to the world’s largest economy accounting for 18 per cent of Indian exports.

On the other hand, some key exports such as electronics and smartphones are expected to remain exempt from tariffs, with “strong demand” from other big markets including Europe and the Middle East seen partially offsetting the US impact.

The UN also upgraded the global growth forecast for 2026 by 20 bps to 2.7 per cent, with the world economy seen expanding 2.8 per cent in 2025, 40 bps faster than previously anticipated. However, Christopher Garroway, the UN’s country economist for India, said on Thursday there were several risks to the forecasts, including from climate change and persistent inflation.

Annual growth of global military expenditure and the contributions of major countries.

While global growth is seen edging up to 2.9 per cent in 2027, the UN report warned it would still be lower than the 3.2 per cent average annual growth seen during 2010-2019. With structural headwinds like subdued investment, high debt levels, and limited fiscal space limiting productive capacity and holding back potential growth in many countries, the world could “settle into a persistently slower growth path than in the pre-pandemic era”. And while artificial intelligence could help lift productivity growth, uncertainty remains about the scale, timing, and distribution of the potential gains from these advances.

(With Inputs from World Economic Situation and Prospects Report-2026)