The world is getting richer and spending much of that wealth on its armies. That is the most interesting conclusion that emerges from between the lines of this year's Military Balance, the annual compendium from the International Institute for Strategic Studies.

The observations of the influential London-based think-tank, celebrating its 50th year, have often tended towards the fearful. That is perhaps an inevitable consequence of seeing the world through the prism of security and defence, the IISS's focus. This year, it has added a list of terrorist groups to its meticulous, 496-page account of who's got what, in the military domain.

All the same, there begins to be a question about whether this catalogue of armoury and fighters overstates the risk of conflict worldwide, when rising prosperity is also taking so many millions of people out of poverty and illiteracy. The phrase “military balance” itself is redolent of the Cold War, when the IISS started. The question left dangling at the end of this valuable but myopic document is whether a world that spends more on ever more sophisticated military kit, is necessarily more unsafe.

There is no question the sums are large. Yesterday, President Bush asked Congress for $515 billion (£262billion) for defence - a rise of 7.5 per cent in the core budget - and for an initial $70 billion for Iraq and Afghanistan until the new President takes over. Total military outlays of $675 billion in 2009 will take up 4.4 per cent of the US economy, analysts say.

In contrast, China, with an army of 2. 1 million, spends only $47 billion - but that was a rise of 25 per cent, after a 20 per cent rise the previous year. Russia is diverting some oil revenues to defence, for a budget this year of $33 billion, the IISS says. Saudi Arabia and other oil states are also spending more.

Defence accounting is notoriously difficult, plagued by differences in the cost of labour between countries, and in the treatment of past research costs when buying more of the same kind of weapon. But it is hard to be convinced from this tally that the world is rearming for new conflicts.

Britain and much of the rest of Europe are spending less as a share of their economies, despite Afghanistan. Congress may well not agree to Bush's requests. There are signs of mini-arms races in parts of Asia, but the IISS portrait suggests instead a world of booming growth, indulging itself in the military supermarkets, without urgent need.

Since 9/11, the IISS has been one of the most astute think-tanks, strong on precision, its assertions about Iraq's weapons a rare mistep. But there must be a suspicion that it is trapping itself in a world of alarms, ignoring the economic hopefulness of the same period.

That impression was accentuated by yesterday's release of the document, conducted as if a small military regime had taken over a 19th-century London townhouse. Dr John Chipman, “director-general and chief executive”, stood in front of his junta of ten men, who sat square-jawed and immobile until directed to answer a question. He withheld copies of the report until the end, and so questions were restricted to the “what do you foresee?” variety, common on Libyan or Cuban state television.

Dr Dana Allin, a US specialist, injected a moderate note, arguing that while it was tempting to see Afghanistan as “an existential test” for Nato, because it was the most difficult test the alliance now faced, talk of its disintegration was too dramatic. The lingering sense is that seven years of heightened alertness has made it harder to see the world for the missiles.

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