Germany and Japan are accelerating defence collaboration as they rebuild their armed forces for the first time since World II. Defence ministers Boris Pistorius and Shinjiro Koizumi met at Yokosuka naval base in March, pledging joint development of drones, helicopters and other systems. The partnership will feature prominently at the G7 summit in Evian, where leaders expect to formalise technology‑sharing agreements.

The policy shift follows years of post‑war restraint. Chancellor Friedrich Merz lifted borrowing caps to fund a defence surge that could soon outpace France and Britain combined, while Prime Minister Sanae Takaichi steered a $58 billion budget and secured a $6.5 billion warship contract with Australia. Both leaders cite a “most severe” security environment driven by China and Russia.

Industry analysts warn the rearmament drive will boost European and Asian defence markets, with German arms firms eyeing joint projects and Japanese shipbuilders expanding export pipelines. At the same time, domestic protests in Tokyo highlight lingering opposition to deeper militarisation. The tangible outcome: increased procurement budgets and cross‑border contracts will reshape global defence supply chains.

Investors watching the sector should note that German defence orders are projected to rise by double‑digits, while Japanese export deals could lift shipbuilding revenues by up to 15 percent this year. The rearmament agenda therefore presents clear revenue opportunities for aerospace and naval contractors, offering growth for the global industry.