Fumio Kishida, Japan’s prime minister announced that he will step down in one month. This marks the end of a three-year term.
The decision was made after a decline in support from the public due to political scandals, and a rise in living costs.
Kishida’s resignation is likely to trigger a contest for leadership within the Liberal Democratic Party, which will determine his replacement.
Political scandals and falling approval ratings
Kishida’s popularity started to decline shortly after his assumption of office in 2021. This was due to revelations regarding the LDP’s ties to the controversial Unification Church.
A slush-fund of political contributions unrecorded linked to LDP fundraiser events exacerbated the situation.
The public’s dissatisfaction increased as the wages did not keep up with rising costs of living, even though Japan had recovered from deflation.
Kishida, who announced that he would not seek to be re-elected as LDP president, acknowledged these concerns and said, “Politics can’t function without the public’s trust.”
In September, the LDP will hold a contest for its leadership. The winner is likely to be Japan’s new prime minister.
Highlights of Kishida’s reign
Kishida’s policies during his tenure in office were aimed at increasing household incomes. This was a departure from the previous economic strategy that focused on trickle down economics based on profit maximization for corporations.
His efforts to reduce income inequality included wage increases and the promotion of share ownership.
Kishida played an important role in leading Japan to recover from the COVID-19 epidemic by spending massive amounts of money on stimulus.
Kazuo Ueda was appointed as head of the Bank of Japan to help the country move away from the radical monetary stimuli of his predecessor.
In July, the BOJ unexpectedly raised interest rates amid rising inflation. This led to instability on the stock markets and an increase in yen value.
Shoki Omori is the chief Japan desk Strategist at Mizuho Securities, Tokyo. According to him, Kishida’s departure may lead to a tightening of fiscal and monetary policies, depending on his successor. Omori said that under the new leadership, “risk assets, especially equities will be most affected”.
Kishida also ushered in a new era of Japan’s national security, as it responded to a geopolitical climate that was becoming more volatile.
He announced the largest Japanese military buildup in history, surpassing even World War Two. The commitment to double defense spending is to combat potential threats coming from China.
Kishida repaired strained relationships with South Korea and enabled a closer cooperation in security with the US, to combat the threat posed by North Korea’s nuclear and missile weapons programs.
Japan’s search for new leadership
As the LDP gears up for its leadership race, several potential successors have been identified.
Shigeru Koizumi, former environment minister Shinjiro Koizumi, Yoko Kamiwaka, Taro Kono and the former Defence Minister Shigeru Koiba are all considered to be strong candidates.
Analysts believe the LDP needs a new leader that can separate the party from scandals which have beset it over the past few years.
The party will need to survive the general elections due in 2025, and a fresh face without any ties with the current government is crucial.
Atsuo Ito, a political analyst said:
The LDP could face a devastating defeat if it chooses its new leader without considering public criticism of political funding scandals. It is important that the party chooses someone who can represent a fresh new LDP.
In a difficult economic and geopolitical climate, the LDP decision not only will determine who the next Prime Minister is but also will shape the political landscape of Japan.
As new developments unfold, this post Japan’s PM Kishida will step down amid economic and scandalous challenges could be updated.
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