Military Spending: A Hindrance to Economic Growth

Fabio Panetta, Italy's central bank governor, highlights that military spending and arms production negatively impact long-term economic growth. Amid rising global arms spending and NATO debates, Panetta argues that war undermines prosperity and technological progress. The focus should shift to international trade and economic openness.

Italy's central bank governor, Fabio Panetta, has raised concerns over the impact of military spending on long-term economic growth, asserting that the production of arms fails to contribute positively to a nation's economic potential.

Speaking in Bologna, Panetta highlighted data illustrating the increasing frequency of global conflicts, reaching a peak not seen since World War Two. While short-term economic gains might arise from arms production, Panetta emphasized the enduring damage to infrastructure and social cohesion caused by warfare.

With rising global arms expenditure and pressures from the U.S. for NATO countries to boost their defense budget, Panetta warned against associating military spending with technological advancement, instead describing war as "development in reverse." He stressed the importance of maintaining open international trade to foster economic prosperity.

(With inputs from agencies.)