Tokyo: Japanese Prime Minister Fumio Kishida will step down as ruling party leader in September, media reported Wednesday, ending a three-year tenure during which he pushed for higher salaries and increased defense spending. Kishida, whose public support has been eroded amid a series of scandals and political disputes, will not seek re-election as leader of the Liberal Democratic Party (LDP), local media including public broadcaster NHK reported, citing senior administration officials.
His decision to step down will trigger a contest to replace him as party chief and, by extension, leader of the world’s fourth-largest economy. His successor will face rising living costs, escalating geopolitical tensions and the possible return of Donald Trump as U.S. president next year.
Kishida’s role during the COVID-19 pandemic
As the country’s eighth-longest-serving leader since World War II, Kishida led Japan out of the COVID pandemic with massive stimulus spending but then appointed Kazuo Ueda, an academic charged with ending his predecessor’s radical monetary stimulus, to lead the Bank of Japan (BOJ). In July, the BOJ unexpectedly raised interest rates, contributing to stock market instability and causing the yen to fall sharply.
“If the report is accurate, we should expect tighter or neutral but slightly tighter monetary and fiscal policy, depending on the candidate,” said Shoki Omori, chief strategist for the Japan desk at Mizuho Securities in Tokyo.
“In short, risk assets, particularly stocks, will likely be hit the hardest,” he added. In another break with the past, Kishida also eschewed trickle-down economics driven by corporate profits in favor of policies aimed at boosting household incomes, including wage increases and promoting stock ownership.
Scandals in Japan
Kishida, plagued by his party’s corruption scandals, has seen his support ratings fall below 20 percent. Kishida was scheduled to explain his decision at a news conference on Monday afternoon. Since the corruption scandal broke, Kishida has removed several cabinet ministers and others from executive party posts, dissolved party factions that were criticized as sources of cash-for-favors politics and passed a law tightening the law on controlling political funds. But support for his government has waned.
The scandal centres on undeclared political funds raised through ticket sales for party events. It involved more than 80 LDP lawmakers, most of them belonging to a major faction of the party previously led by assassinated former Prime Minister Shinzo Abe. Ten people, lawmakers and their aides, were indicted in January.
(With contributions from agencies)
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