Turkey is preparing a 229% surge in defense spending over 2027-2029, a budget shift that underscores Ankara’s push to build a more self-reliant military-industrial base and accelerate domestic weapons production.
Turkey defense spending rises 229% through 2027-2029
The increase, set out in the country’s new medium-term program and presented by Vice President Cevdet Yılmaz, places defense at the top of seven spending priorities and signals that security and industrial policy are being fused into one agenda. For investors and suppliers, that matters because it points to a longer, more predictable pipeline of procurement and industrial orders, even as Turkey remains a more geopolitically and fiscally complex customer than NATO peers.
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The funding is tied directly to high-value local programs, including mass production of the TF-KAAN fighter, initial deliveries of the KIZILELMA unmanned aircraft and the addition of more than 10 Altay main battle tanks to the army. That makes the budget increase more than a headline military buildup: it is an effort to move Turkey further up the defense value chain, from buyer to producer of advanced systems.
Economically, the plan reflects Ankara’s view that defense spending can support industrial output, technology transfer and export capacity at a time when growth is being shaped by inflation, energy costs and regional instability. Yılmaz also linked the program to an unsettled international backdrop, saying conflict in the region is affecting energy prices, trade flows and inflation.
Turkey spent about $30 billion on defense in 2025, according to SIPRI, equal to 1.9% of GDP and already up 7.2% year on year. The new three-year surge suggests a materially faster pace ahead, though the eventual effect will depend on how much of the budget is converted into domestic contracts versus imported systems, and whether financing pressure or inflation forces a slower rollout.
For investors, the immediate relevance is to defense contractors and key industrial suppliers that stand to benefit from procurement tied to Turkish programs. U.S. peers such as Lockheed Martin, Northrop Grumman and RTX are not direct beneficiaries of the Turkish buildout, but the scale of the spending signals a broader global rearmament cycle that supports sentiment across the defense sector. The clearest upside, however, likely sits with Turkish manufacturers and program partners positioned around KAAN, Altay and unmanned systems.
The bull case is that Turkey’s spending surge strengthens a strategically important defense ecosystem, opens export opportunities in nearby markets and reduces reliance on foreign suppliers. The bear case is that the state’s ambitions outrun industrial capacity, while inflation, currency weakness and budget discipline limit how much of the plan can be executed on schedule. The next key test will be whether Ankara turns the headline increase into sustained orders, faster production and exportable platforms.
| Entity | Gains | Losses |
|---|---|---|
| Turkish defense firms | ▲Bigger domestic orders | ▼Higher execution pressure |
| KAAN, KIZILELMA, Altay programs | ▲Faster funding | ▼Delivery/schedule risk |
| Turkey’s industrial base | ▲More high-value production | ▼Inflation and cost overrun risk |
| Foreign arms suppliers | ▲Limited spillover demand | ▼Potentially less Turkish import demand |
