Japan may expand accounting of defense spending amid US calls
Japan may resort to broader accounting of defense-related spending in response to US calls to substantially increase military expenditures. Japan’s Ministry of Defense has requested nearly ¥9 trillion for the next fiscal year, and after a review of three key security documents, the amount could exceed ¥10 trillion, The Japan Times reports.
At the same time, this level of spending is far from the benchmark of 3.5% of GDP that the United States is urging its allies to reach. With Japan’s nominal GDP at about ¥690 trillion, such spending would amount to approximately ¥24 trillion per year.
Different calculations of the GDP share
The Japanese government has stated that it will reach defense spending of 2% of GDP in March, two years ahead of schedule. However, the projected figure of 1.9% is calculated using the 2022 GDP level, when it was estimated at approximately ¥560 trillion. If the GDP forecast for fiscal year 2026 is applied, the ratio would be about 1.5%.
To achieve the 1.9% figure, the government included “defense-related expenditures” in its calculations, including certain infrastructure spending and coast guard funding. At the same time, the Japan Coast Guard’s budget request alone for the next fiscal year, amounting to ¥344.8 billion, is unlikely to significantly narrow the gap to 2% of GDP.
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Weak yen raises the cost of weapons
The weakening yen also complicates the purchase of weapons abroad. According to an internal Ministry of Defense review, the prices of major equipment items in last year’s budget rose by 35–66% compared with 2023, when the exchange rate was ¥108 per dollar.
In particular, the cost of one US-made F-35B fighter in fiscal year 2026 increased by about 35%, to ¥24.2 billion. The price of Japan’s P-1 patrol aircraft rose by 50%, to ¥46 billion, while that of the UH-2 helicopter increased by 66%, to ¥4.6 billion. Due to rising costs, the procurement plan for upgraded Mogami-class frigates envisaged 12 ships, but funding had been secured for only eight by fiscal year 2026.
Defense ministry officials noted that the budget request was based on an exchange rate of ¥149 per dollar, although the actual rate used for calculations may be adjusted at the end of the year. Experts also suggest that Tokyo could count part of the funding for space programs, cybersecurity, research and development, diversification of critical mineral supplies, and shipbuilding as defense spending.
