Japan approves extra budget, raising defense spending beyond 2 pct of GDP

Japan will achieve its goal of allocating 2 percent of GDP to defense spending ahead of schedule after the government approved a supplementary budget for fiscal year 2025 at a cabinet meeting on Friday, according to media reports.

Local media reported on Saturday that Japan's Ministry of Defense gets 847.2 billion yen (about 5.42 billion U.S. dollars) in the supplementary budget, with 122.2 billion yen earmarked for acquiring destroyers, submarines, and other vessels, and 56.6 billion yen designated for missile procurement.

Combined with related expenditures from other ministries and agencies for public works and research related to security, the total defense-related funding in the supplementary budget exceeds one trillion yen. Together with the initial budget of 9.9252 trillion yen, the overall defense-related funding for fiscal year 2025 will reach approximately 11 trillion yen.

At a press conference on Friday, Japanese Defense Minister Shinjiro Koizumi said explicitly that the country's defense spending will reach 2 percent of its GDP.

Japanese Prime Minister Sanae Takaichi announced in an October speech that the "2 percent of GDP" target for defense spending, originally set for fiscal year 2027, would be met within the current fiscal year.

The supplementary budget compiled by Japan's Ministry of Defense remained around 200 billion yen in the early 2010s. It exceeded 400 billion yen after fiscal year 2018, and ballooned to over 800 billion yen after fiscal year 2023.

Japan approves extra budget, raising defense spending beyond 2 pct of GDP

The eurozone composite purchasing managers' index (PMI) -- a key indicator of business activity -- fell to 47.5 in May, the lowest level in 31 months, according to data released in an S and P Global report on Thursday.

The report said that increased cost pressures have led to a contraction in business activities in the eurozone.

The service sector, a key pillar of the economy, took a heavy hit, with its PMI plunging to 46.4, a 63-month low.

Meanwhile, the manufacturing PMI stood at 51.4, suggesting the pace of expansion slowed to its weakest since January.

The report quoted Chris Williamson, chief business economist at S and P Global Market Intelligence, as saying that the preliminary PMI data for May showed the war in the Middle East has been weighing increasingly heavily on the eurozone economy.

The eurozone economy is expected to contract by 0.2 percent in the second quarter, while inflation could approach 4 percent in the coming months, according to Williamson.

Eurozone composite PMI falls to lowest level in 31 months