Prime Minister Justin Trudeau is defending Canadian military spending as a new NATO report shows Canada heading in the wrong direction.

Canada and other members of the NATO military alliance agreed in 2014 to increase their defence spending to 2% of their national gross domestic product.

But the new report released by NATO Secretary-General Jens Stoltenberg on Monday, estimates Canadian defence spending will actually drop as a share of GDP this year.

Ahead of a NATO summit in Spain, where the issue of defence spending will be front and centre, Trudeau says Canada is investing more money in new fighter jets and North American defences.

He also says Canada has repeatedly proven its commitment to the military alliance by stepping up with deployments in Latvia and elsewhere.

The prime minister sidestepped a question over whether Canada is prepared to send more troops to Latvia, as NATO seeks to double the size of its forces throughout the Baltics.

(The Canadian Press)