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Defense spending to hit $47 billion as sector strives for 3.5% of GDP

Published: 03 Sep. 2025, 15:04 Updated: 03 Sep. 2025, 17:29

Korean and U.S. Marines conduct live-fire training with personal and crew-served weapons during a Korea Marine Exercise Program combined infantry exercise on Aug. 6. [YONHAP]

The Korean government proposed a 66.3 trillion won ($47.4 billion) defense budget for 2026 in an apparent bid to raise its spending in the sector to 3.5 percent of GDP by 2035, aligning with NATO benchmarks and bolstering its military partnership with the United States.

The projection follows President Lee Jae Myung’s summit with U.S. President Donald Trump last month, during which Lee pledged to strengthen Korea’s defense posture as Washington pushes its allies to shoulder a greater share of security costs. The two sides are expected to move toward a NATO-style framework targeting a combined 5 percent defense contribution — 3.5 percent in direct spending and 1.5 percent in indirect investments — by 2035.

The Ministry of National Defense announced Tuesday that it submitted a proposed 2026 defense budget of 66.3 trillion won to the National Assembly, an 8.2 percent increase from 2025 and the largest annual rise since 2019.

To meet the 3.5 percent target by 2035, Korea would need to raise its defense budget by an average of 7.7 percent annually beginning in 2027.

Based on projected GDP growth rates of 2.7 to 3.4 percent, the ministry estimates the following milestones: 71.4 trillion won in 2027 or 2.54 percent of the projected GDP, 82.8 trillion won in 2029 or 2.76 percent, 103.5 trillion won in 2032 or 3.12 percent and 128.4 trillion won in 2035 or 3.5 percent.

Analysts say that given next year's projected increase of 8.2 percent, the goal is within reach.

“The 2026 budget focuses on three priorities: enhancing capabilities for wartime operational control transfer through the three-axis system, improving service conditions to raise troop morale and investing in next-generation defense technologies such as AI and drones,” a defense ministry official said.

The three-axis system refers to South Korea's strategic framework designed to deter and respond to North Korea’s nuclear and missile threats. It consists of Kill Chain, or pre-emptive strike capability; the Korea Air and Missile Defense (KAMD) system, which intercepts incoming missiles; and the Korea Massive Punishment and Retaliation (KMPR) strategy, which targets the enemy’s leadership and key facilities in the event of an attack.

A helicopter sits on the tarmac at Camp Humphreys in Pyeongtaek, Gyeonggi, on Aug. 12. [NEWS1]

Of the total 2026 budget, 20.17 trillion won will go to costs related to military capability enhancement, up 13 percent from 2025, and 46.12 trillion won will be allocated to power operation expenses associated with service conditions, welfare and overall military readiness, marking a 6.3 percent increase from this year.

Spending on the three-axis system will rise 22.3 percent year over year to 8.9 trillion won. This includes 5.3 trillion won for Kill Chain capabilities such as initial production of the domestically developed KF-21 fighter jet.

The KAMD system will receive 1.81 trillion won to fund projects including the Navy’s Aegis-equipped KDX-III Batch II destroyers. For the KMPR strategy, 739.2 billion won will be allocated to upgrades to the Air Force’s C-130H transport aircraft used in special operations.

The ministry allocated 1.04 trillion won to improving reconnaissance and command capabilities, including 549.9 billion won to the second phase of the Air Force’s airborne early warning and control aircraft program.

Korea currently operates four E-737 Peace Eye aircraft. The procurement of four additional units under a long-stalled program is now in its final selection stage, with contracts expected to be signed by the end of this year, according to a government source.

The ministry also plans to invest 340.2 billion won in AI-based manned-unmanned teaming systems, up from 191.5 billion won last year. This includes upgrades to scientific surveillance systems at general outposts along the inter-Korean border.

An F-16 fighter jet lands at Osan Air Base in Pyeongtaek, Gyeonggi, on Aug. 18 during the Ulchi Freedom Shield exercise. [NEWS1]

The budget includes 2.1 trillion won for improving health and welfare services for enlisted personnel, an 18.3 percent increase.

Duty pay for military officers will rise from 20,000 won to 30,000 won on weekdays and from 40,000 won to 60,000 won on holidays — still below the pay scale for civil servants, who receive 50,000 won on weekdays and 100,000 won on weekends.

The Defense Ministry will also launch a new savings program allowing junior career officers to save up to 300,000 won monthly for three years.

Research and development spending will rise 19.2 percent to 5.91 trillion won. That includes 349.4 billion won to advance stealth technology and domestic aviation engines for next-generation fighter jets, up from 250.3 billion won in 2025.

“We allocated 20.5 billion won to purchase small commercial drones for training and to train drone instructors,” a Defense Ministry official said. “This will allow all 500,000 service members to practice flying drones on base and even obtain certification.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY LEE YU-JUNG [[email protected]]