Rank #11 · Middle East
Israel's military spending surged to an estimated $46.5 billion in 2024-2025, representing approximately 8.8% of GDP — the highest defence burden of any Western-aligned economy. The October 7, 2023 Hamas attack triggered a wartime mobilisation across Gaza, Lebanon, and against Iranian proxies that has made the Israel Defense Forces the most operationally active military in the Middle East, while accelerating procurement of F-35I Adirs, Arrow 3 interceptors, and next-generation precision munitions.
Israel's pre-October 2023 defence baseline was approximately $23 billion annually (~5% of GDP). The Hamas attack and subsequent Gaza campaign required multiple emergency supplementals approved by the Knesset, pushing 2024 outlays to roughly $46.5 billion. US security assistance — including a $14.1 billion emergency package enacted March 2024 and an ongoing presidential drawdown of munitions — supplements Israeli appropriations but is not counted in the SIPRI figure. The 2025 budget sustained elevated wartime levels as the campaign in Lebanon (September-November 2024) and sustained strikes on Iranian proxies added new operational costs. Iron Dome interception alone burned through an estimated $1 billion in interceptors during the October 2023-March 2024 period.
The IDF fields 169,500 active personnel organised into the Israeli Ground Forces, Israeli Air Force (IAF), Israeli Navy, and Intelligence Directorate. The reserve system is the strategic core: a call-up can triple effective combat strength within 72 hours. The IAF operates 48 F-35I Adirs (with 52 more on order), over 200 F-15I/C/D variants, and a growing fleet of Heron TP and Eitan long-endurance UAVs. Air defence is layered: Iron Dome (short-range rockets), David's Sling (medium-range missiles), Arrow 2 (endo-atmospheric ballistic), and Arrow 3 (exo-atmospheric intercept capable of hitting ICBMs). The navy operates Dolphin-class submarines widely assessed to carry a nuclear second-strike capability.
Israel's defence industry is among the most export-intensive in the world relative to population. Elbit Systems (electro-optics, UAVs, helmet-mounted displays, electronic warfare), IAI (satellites, Barak naval SAM, Harop loitering munition, Arrow missiles with Boeing), and Rafael (Iron Dome, Spike ATGM, Python-5, Stunner interceptor for David's Sling) form the top tier. Israeli arms exports reached a record ~$13.1 billion in 2023 before falling amid international pressure following Gaza. The F-35I Adir programme involves Israeli-specific software integration, radar, helmet displays, and conformal fuel tanks — giving Israel unique indigenous capability within an allied platform.
Israel has been on a multi-front wartime footing since October 7, 2023. The Gaza campaign against Hamas continues with no established end date. Israeli strikes on Hezbollah in Lebanon culminated in a ground operation (September-October 2024) and a ceasefire in late November 2024. The April 2024 and October 2024 direct Iranian missile and drone attacks — and Israeli retaliatory strikes on Iranian air-defence and missile sites — represent the first direct Israel-Iran exchange in history. The April 8, 2026 US-Iran ceasefire following Operation Epic Fury reduces but does not eliminate the Iranian threat vector. Gaza reconstruction costs and hostage negotiations remain unresolved political drivers of defence posture.
SIPRI's April 2026 release confirmed Israel as one of the largest year-on-year spending increases globally for 2024-2025. A second batch of 25 F-35I Adirs was formally contracted in January 2025, bringing the total order to 75 aircraft. Israel's Arrow 3 system intercepted an Iranian ballistic missile in October 2024 in the first operational exo-atmospheric intercept in history. The US-Israel Memorandum of Understanding on security assistance, covering $3.8B per year through FY2028, was reaffirmed in February 2025. Elbit Systems reported record revenues of $6.4 billion in FY2024, driven by domestic wartime orders and increased European demand for artillery and UAV systems.
Israel spent approximately $46.5 billion on defence in 2024 — around 8.8% of GDP — following the October 7, 2023 Hamas attack. This is roughly double the pre-war baseline and gives Israel the highest defence-spending share of GDP among Western-aligned economies. US security assistance of ~$3.8B per year supplements but is not included in this figure.
Israel neither confirms nor denies possessing nuclear weapons, a policy known as deliberate ambiguity or "Amimut." The Federation of American Scientists estimates approximately 90 warheads, all in reserve storage. Israel's Dolphin-class submarines are widely assessed to provide a sea-based second-strike capability.
Israel operates a four-layer missile defence architecture: Iron Dome intercepts short-range rockets and artillery shells; David's Sling targets medium-to-long-range ballistic and cruise missiles; Arrow 2 provides endo-atmospheric ballistic missile defence; and Arrow 3 provides exo-atmospheric intercept — used operationally against Iranian ballistic missiles for the first time in October 2024.
Elbit Systems (UAVs, electro-optics, electronic warfare, $6.4B FY2024 revenue), IAI — Israel Aerospace Industries (satellites, Barak SAM, Arrow missiles, Harop loitering munition), and Rafael Advanced Defense Systems (Iron Dome, Spike ATGM, David's Sling Stunner interceptor) are the three national primes. All export globally, with European demand surging post-2022.