Japan's defence spending is expected to grow at a compound annual growth rate (CAGR) of 1.74% over the next five years to reach $45.8bn by 2021, according to a report by Strategic Defence Intelligence (SDI).

Titled 'Future of the Japanese Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2021', the report states that the capital expenditure is anticipated to be constant during 2017-2021.

"Much of the budget allocation will be used for procurement of multi-role aircraft, destroyers, and military IT hardware."

The report also claims that much of the budget allocation will be used for procurement of multi-role aircraft, destroyers, and military IT hardware, as well as the maintenance, overhaul and repair (MRO) of transport aircraft.

The defence spending will be driven by the nation's efforts to counter the growing threat from North Korea, Chinese intrusion in offshore islands around the country, and Russian actions in the disputed Northern territory.

Defence expenditure over the next five years is anticipated to average 0.96% of the total GDP, while defence imports are expected to increase over the forecast period.

The Japanese military comprises the Japan Ground Self-Defence Force (JGSDF), the Japan Maritime Self-Defence Force (JMSDF), and the Japan Air Self-Defence Force (JASDF).