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Japan Defense Market Size and Growth Overview (2026-2034)
Market Size in 2025: USD 36.4 Billion
Market Forecast in 2034: USD 45.1 Billion
Market Growth Rate 2026-2034: 2.43%
According to the latest report by IMARC Group, Japan's defense market size reached USD 36.4 Billion in 2025. Looking forward, IMARC Group expects the market to reach USD 45.1 Billion by 2034, exhibiting a growth rate (CAGR) of 2.43% during 2026-2034.
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Japan Defense Market Trends & Drivers
Japanese defense spending is rising in response to geopolitics in the Asia-Pacific threatening Japan, such as Chinese naval military drills around the disputed Senkaku Islands and Chinese naval activity in the East China Sea, which has raised Japan's threat perception of external threats and prompted its government to improve its defense capabilities. The rapid modernization of the PLA, including its naval forces and long-range strike capabilities, poses a challenge for Japan to keep pace and acquire defense capabilities in a timely manner. The continued ballistic missile development program of the DPRK, some of which have overflown or landed close to Japan, requires the construction of wide-ranging air and missile defense capabilities. These regional dynamics drove Japan to move from defensive postures towards deterrent-oriented defense strategies.
The new focus on developing a domestic production base represents a shift in Japanese defense policy that seeks to reduce reliance on foreign procurement and develop the domestic defense industrial base. Japan's defense policy now encourages, using government research funding, tax incentives, and long-term procurement commitments, domestic development and production of key defense equipment. More than 60% of Japan's defense budget is spent on indigenous development of advanced defense technologies such as hypersonic systems, space-based information gathering and reconnaissance systems, directed energy weapons and next-generation fighter aircraft through international joint development of defense equipment. The Three Principles on Transfer of Defense Equipment and Technology were revised to allow Japanese defense contractors to export and achieve economies of scale. Consequently, the combination of threat environment, modernization requirements, budgetary support, and industrial policy will provide a sustainable environment for future growth of the Japan defense market.
Japan Defense Industry Segmentation
The report has segmented the market into the following categories:
Breakup by Armed Forces:
Breakup by Type:
Breakup by Region:
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Competitive Landscape
Future Outlook
The Japan defense market demonstrates steady growth potential, with market value projected to expand from USD 36.4 billion in 2025 to USD 45.1 billion by 2034. This trajectory reflects Japan's sustained commitment to defense capability enhancement amid an increasingly challenging regional security environment. The persistent threat posed by China's military expansion and North Korea's missile programs will continue driving defense investment priorities throughout the forecast period. Technological modernization across air, naval, and ground forces will accelerate, with particular emphasis on standoff weapons, missile defense systems, space-based assets, and cyber warfare capabilities.
Key highlights of the Report:
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