Global Scans · Japan · Weekly Summary

WHAT'S NEXT?: The latest sign of weakness in Japan's economy will likely add to mounting skepticism about the prime minister's expansionary policies. His coalition government has just achieved the supermajority it needs to amend the constitution which many are worried that Japan is about to remove the mask of pacificism and convert its "Self-Defense Force" into the military threat it really is.

• [New] In Japan, the Ministry of Health, Labour and Welfare highlights that the working-age population is projected to shrink by nearly 20% by 2040. Persistence Market Research
• [New] The U.K.'s leadership role in the Global Combat Air Programme alongside Italy and Japan will lift defence propulsion R&D spending materially through 2033. Persistence Market Research
• [New] Going forward, a practical solution for Japan's manufacturing sector will be to adopt a multi-model strategy - one that allows for switching between U.S., Chinese, and European LLMs based on specific use cases - for the LLMs used in-house. Amiko Consulting
• [New] Within Japan's manufacturing sector as well, the adoption of agents for engineering-related tasks - such as CAD / CAE, simulation, procurement, and quality documentation - is expected to advance rapidly over the next two to three quarters. Amiko Consulting
• [New] The government of Japan has set a goal to increase its inward FDI position to JPY 150 trillion by the end of 2030, more than doubling the JPY 58.5 trillion FDI it held in 2025. Hudson Institute
• [New] With more than half of Japan's SMEs now owned by someone over age 60, the next decade will see a significant shift in the ownership of Japan's 3 million SMEs. Hudson Institute
• [New] Although Japan's core inflation has remained below the BoJ's 2% target over the last four months, analysts predict a jump in the last quarter of the year to the mid-2% range on higher oil prices following the Iran war. The Guardian
• [New] The Japanese government's revised Basic Hydrogen Strategy (2023) targets of 12 million tons of domestic and imported hydrogen supply by 2040, supported by a ¥15 trillion (approximately US$ 100 billion) public-private investment framework over 15 years. Persistence Market Research
• [New] Japan's National Security Strategy (2022) doubled defence spending targets to 2% of GDP by 2027 the largest Japanese defence build-up since World War II, creating significant new soldier system procurement demand from the Japan Ground Self-Defense Force. Persistence Market Research
• [New] With Sierra's world-class AI agent technology, SoftBank will accelerate AI adoption among Japan's enterprises and help create customer experiences of higher value by enabling AI-native customer touchpoints. SoftBank
• [New] By the end of 2026, 45% of AI-fuelled digital use cases across Asia-Pacific and Japan will fail to meet their return-on-investment targets. Asia Times
• [New] Japanese Prime Minister Sanae Takaichi's Cabinet on Tuesday approved its first comprehensive economic and fiscal policy guidelines, targeting aggressive fiscal spending in strategic sectors and a combined 370 trillion yen ($2.3 trillion) in public and private investment by 2040. Yeni Safak
• [New] Japan's intelligence overhaul could improve trilateral warning, cyberdefence, sanctions enforcement, and tracking of North Korean activity, but it will also give Tokyo a larger role in collecting and controlling sensitive regional information. Fault Lines
• [New] Japan's JHPC-quantum program, a 5-year JPY 10 billion program running through 2027, or USD 67 million at 2025 average exchange rates, is building the software foundation for quantum-HPC hybrid workflows and shows that procurement-led demand is not limited to North America. Mordor Intelligence
• [New] SoftBank and SB OAI Japan will progressively introduce optional services to further strengthen the cyber defence capabilities of enterprises based in Japan. SoftBank
• [New] To counter AI-accelerated cyber threats, SoftBank and SB OAI Japan believe that organizations need to leverage AI to implement rapid and continuous security measures. SoftBank
• [New] Germany aims to construct 10-20 new gas-fired plants by 2030, while Japan is considering new gas facilities after reversing a prior view that its power demand was in long term decline. MIT Initiative for New Manufacturing Substack
• [New] The Japanese automotive sector's medium-term outlook will depend on the success of new investment programmes targeting next-generation EV production and whether OEMs can reposition their export strategies in order to grow sales in emerging markets. atradius
• [New] We expect Japanese automotive production to contract by 3.6% in 2026 and by 2% in 2027. atradius
• [New] Japan is to open its first centralised intelligence agency since the Second World War in the face of increased security threats posed by China, Russia and North Korea. The Week

Last updated: 01 August 2026