(Bloomberg) -- The growth of Japan’s GDP may sound like good news for the country, but it also means it will have to pay more to reach its target to spend 2% of GDP on defense, adding to the woes of a nation already under pressure from US President Donald Trump to boost its military output.
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Japan’s economy expanded to a record ¥609 trillion ($4.1 trillion) in nominal terms last year, according to a government report released Tuesday. Should the expansion continue, the percentage of the defense budget in comparison to GDP would shrink and could imperil Japan’s target to spend 2% of its GDP on defense by 2027.
The report also comes a week after Elbridge Colby, Trump’s pick for the top policy job at the Pentagon, said Japan should spend at least 3% of GDP on defense at a Senate confirmation hearing.
If Japan, which currently spends about 1.4% of GDP on its military, were to heed Colby’s comments, it would add over ¥9 trillion to an already stretched budget. That’s on top of headaches the country faces over the largest debt pile among developed economies.
“Japan will decide how much it spends on defense,” Prime Minister Shigeru Ishiba said when asked about Colby’s statement. “It’s not something we would decide based on what another country said.”
This comes as Ishiba’s minority government struggled to finalize the country’s regular budget for the upcoming fiscal year starting next month, entangled in months of talks with opposition parties clamoring to boost spending for a range of issues. As a result, the budget was revised in parliament for the first time in 29 years this month.
In 2022, Japan pledged ¥43 trillion to a military build-up that would span five years, aiming to double its defense spending in a departure from its long-held stance of keeping spending to 1% of GDP.
On Thursday George Glass, Trump’s pick to become US ambassador to Japan put additional pressure on that front in a Senate committee hearing, referring to the costs of the US military presence in Japan.
Weapons systems and command and control that need upgrading are “very expensive,” Glass said. “Undoubtedly, I do believe we’re going to have to go to the Japanese and talk about an increase in that support,” he said, while also touching on how Chinese sophistication has grown since Trump’s first term.