Key Points
- Japan’s ruling Liberal Democratic Party is due to hold an internal leadership race in September.
- Fumio Kishida will step down as Japanese prime minister next month.
- Kishida’s popularity plummeted due to scandals and rising prices.
Japanese Prime Minister Fumio Kishida announced he would resign in September, ending a three-year term amid low approval ratings and a series of political scandals.
“I will continue to do everything I can as prime minister until my term ends in September,” Kishida said in a televised news conference Wednesday to announce his decision not to seek re-election in head of the Liberal Democratic Party (PLD).
What is happening now?
Kishida, 67, has been in power since October 2021. His party’s poll numbers have fallen in response to rising prices hitting Japanese incomes.
His decision to resign triggers a competition to replace him at the head of the party and, by extension, at the head of the world’s fourth largest economy.
Public support for Kishida has eroded over revelations about the party’s ties to the controversial Unification Church and, more recently, unregistered political donations made at LDP fundraisers.
Michael Cucek, a professor specializing in Japanese politics at Temple University in Tokyo, said: “He’s a dead man who’s been walking for a while.”
“There was no way to add up the numbers for him to get re-elected,” he said.
The LDP’s chosen successor will have to unite a divided leadership group and confront likely further increases in the cost of living, escalating geopolitical tensions with China and the potential return of Donald Trump to the US presidency. next year.
Career wins and losses
As the country’s eighth-longest-serving postwar leader, Kishida led Japan out of the COVID pandemic with massive stimulus spending.
But he then appointed Kazuo Ueda, an academic charged with ending his predecessor’s sweeping monetary stimulus, to head the Bank of Japan (BOJ).
In July, the BOJ unexpectedly raised interest rates as inflation took hold, contributing to stock market instability and sending the yen tumbling.
Under Kishida, Japan pledged to double its defense spending to reach the NATO standard of 2% of GDP by 2027.
This marks a shift from decades of strict pacifism, encouraged by the United States both .
US President Joe Biden welcomed Kishida to the White House in April when the two countries announced a “new era” of cooperation.
In July, Japan and the Philippines signed a defense agreement authorizing the deployment of troops in each other’s territory.
According to Shoki Omori, chief strategist in the Japan office at Mizuho Securities in Tokyo, Kishida’s departure could lead to tighter fiscal and monetary conditions depending on who comes next.
“In short, risky assets, notably stocks, are likely to be hit the hardest,” he said.
In another break with the past, Kishida also eschewed trickle-down economics focused on corporate profits in favor of policies aimed at raising household incomes, including raising wages and promoting stock ownership.
