Japanese Prime Minister Fumio Kishida to resign as party leader

“The incumbent prime minister of the LDP cannot run for president unless he is sure of winning,” said Koichi Nakano, a political science professor at Sophia University in Japan. “It’s like the champion yokozuna in sumo wrestling. You don’t just have to win, you have to win with grace.”

Whoever succeeds Kishida as LDP president will have to unite a divided ruling bloc and grapple with rising living costs, escalating geopolitical tensions with China and the possibility that Donald Trump could return as U.S. president next year.

The impact of the coronavirus pandemic on inflation

Kishida, Japan’s eighth-longest-serving postwar leader, steered the country out of the coronavirus pandemic with massive stimulus spending. He also appointed Kazuo Ueda as Bank of Japan governor, an academic tasked with ending his predecessor’s aggressive monetary stimulus.

The Bank of Japan’s surprise rate hike in July, amid rising inflation, destabilized stock markets and caused a sharp drop in the yen.

Kishida’s departure could mean tighter fiscal and monetary conditions, depending on the candidate, said Akiki Omori, chief Japan strategist at Mizuho Securities in Tokyo.

“In short, risk assets, especially equities, are likely to be hit hardest,” he said.

In a departure from the past, Mr Kishida has also abandoned trickle-down economics oriented towards corporate profits in favour of policies aimed at boosting household incomes, including by raising wages and promoting equity ownership.

Defense spending

Despite some changes on economic issues, he has stuck to the hawkish security policies of his predecessor Shinzo Abe. Assassinated in 2022.

He announced Japan’s largest military buildup since World War II and pledged to double defense spending in an effort to deter neighboring China from pursuing territorial ambitions in East Asia through military force.

At U.S. urging, Kishida also repaired Japan’s strained ties with South Korea, allowing the two countries and their mutual ally, the United States, to engage in deeper security cooperation to counter the threat posed by North Korea’s missile and nuclear weapons programs.

U.S. Ambassador Rahm Emanuel posted on X (formerly Twitter): “Under the steadfast leadership of Prime Minister Kishida, Japan and the United States have ushered in a new era in their alliance.”