Japanese Defense Budget is the Fifth Largest in the World

Tuesday 19 March 2013, Amsterdam

The Japanese defense budget is the fifth largest in the world and second largest in Asia. It recorded a CAGR of 3.90% during the review period (2009-2013), to reach US$58.6 billion in 2013. Japanese defense expenditure is mainly driven by the threat from North Korea’s long-range ballistic missiles and China's maritime expansion. In addition, the Chinese military's rapid modernization and military expansion has caused particular concern throughout Asia. During the review period, the Japanese defense expenditure as a percentage of GDP accounted for 1%, and this is expected to remain stable over the forecast period (2014-2018). The Japanese MoD spends most of its defense budget on revenue expenditure, which includes personnel salaries, operational expenses, training, and development. Capital expenditure acquires the second largest percentage share of the overall defense budget, and includes the procurement of military equipment, material expenses and R&D expenses, aircraft acquisition and shipbuilding.

 


The Japanese Army received the largest percentage share of the total defense expenditure throughout the review period. In 2013, the Army received 38.2% of the overall budget, while the Navy and Air Force received shares of 24% and 22.3% respectively. The remainder of the budget is allocated for other defense expenditure such as intelligence, joint staff, the National Defense Academy, the National Defense Medical College, the National Institute for Defense Studies, the Technical Research and Development Institute, the Equipment Procurement and Construction Office, and the Inspector General Office of Legal Compliance.

Japanese defense imports decreased during the period 2007–2011. However, the country’s MoD has started procuring the F-35 aircraft from Lockheed Martin, thereby providing an impetus to overall imports. This procurement schedule is expected to continue over the next five years, resulting in a significant rise in defense imports over the forecast period. Japanese defense exports have not been able to grow significantly over the review period due to the Government’s restrictive export policies. However, Japanese defense exports are expected to gain momentum over the forecast period owing to a recent amendment in the existing export ban. This amendment now allows the country to export defense equipment to the United States and European nations. In addition, the revised export policy is expected to allow Japanese defense companies to export defense-related equipment to support peace-building or humanitarian objectives