Security as an economic variable
Geopolitical instability now costs the global economy 1.3% of GDP annually (IMF 2025). Insurance premiums, trade rerouting, and capital flight are quietly reshaping investment decisions. For Canada, conflict risk affects trade routes, energy prices, and defense procurement.
| Indicator | 2015 | 2025 | Source |
|---|---|---|---|
| Global defense spending (% of GDP) | 2.1 % | 2.6 % | SIPRI |
| Conflict-related trade disruption cost ($ tn) | 0.9 | 1.3 | IMF |
| Canada defense budget ($ bn) | 22 | 39 | DND 2025 |
Implications for business
- Defense procurement creates dual-use innovation opportunities.
- Commodity markets remain sensitive to geopolitical shocks.
- Private firms must model security as an operational input.
What leaders can do
- Build geopolitical risk indices into investment models.
- Explore defense-adjacent innovation (cybersecurity, logistics, AI).
- Secure supply redundancy for critical imports.
- Engage government-industry defense roundtables. Anticipate procurement trends.
Arcus Insight: Peace is not the absence of cost — it’s the dividend of resilience. Canada’s stability can be monetized through credibility and preparedness.