The Canadian defense budget stood at US$16.9 billion in 2009, recording a CAGR of 10.18% during the review period. Estimated to total US$19.2 billion in 2010, the defense budget is expected to grow at a CAGR of 0.44% over the forecast period, to reach US$19.7 billion by 2015.
The fall in the growth rate of the defense budget during the forecast period is due to budget cuts announced by the government to reduce its fiscal deficit. As a result, the defense budget is expected to decrease to 1.0% of gross domestic product (GDP) by 2015, compared to the increase from 1.1% to 1.3% witnessed over the review period.
Nevertheless, Canadian defense expenditure is mainly driven by the modernization of its armed forces, which is outlined in the Canada Defense First Strategy (CFDS, the country's participation in various peacekeeping missions around the world, and the need to ensure the sovereignty of the Arctic region, which has become vulnerable to foreign intrusions due to climate change and speculation surrounding oil reserves in the area.