Japan’s defense spending is set to grow from $48.4 billion in 2022 to $70.4 billion in 2027, driven by the need to develop its own defense posture owing to the worsening geostrategic environment in East Asia, which increasingly continues to be threatened by the North Korean nuclear and ballistic missile program, forecasts GlobalData, a leading data and analytics company

GlobalData’s latest report, “Japan Defense Market Size and Trends, Budget Allocation, Regulations, Key Acquisitions, Competitive Landscape and Forecast, 2022-2027,” reveals that Japan’s defense spending is anticipated to grow at a compound annual growth rate of 8.4% during 2022-2027.

Abhijit Apsingikar, Senior Aerospace & Defense Analyst at GlobalData, comments: “Japan’s defense modernization is fueled by the worsening geo-political and strategic environment in East Asia. The country faces an imminent threat from the North Korea’s nuclear and ballistic missile programs, which is further compounded by an increasing Chinese military capability and its reservations against the QUAD security alliance.

“Against this backdrop, Japan rolled out a ‘Defense-Strengthening Acceleration Package’ in 2020, which saw the disbursement of $42.5 billion in supplementary funding over and above the $94.1 billion allotted initially during 2020-2021. This is in line with Japan’s plan to overhaul and modernize its military capabilities to deter any aggression and better prepare to support its allies.”

Japan is also in the process of removing the restriction on defense expenditure, which was previously constitutionally capped at just 1% of GDP and plans to increase it to as much as 2% of GDP.

Apsingikar concludes: “Japan has already signed a deal to cooperate with the UK for the development of a long-range air-air missile and finalized a defense cooperation agreement to co-develop a sixth-generation fighter aircraft. With Japan already loosening its export control restrictions and allowing defense exports to 12 friendly countries, including India, it is anticipated to pave the way for a greater level of cooperation between countries and enable more opportunities for the joint design, development, and production of defense equipment in future.”