14-8-2024 (TOKYO) Japanese Prime Minister Fumio Kishida has announced his resignation, effective September, ending a tumultuous three-year term marked by political scandals and diminishing public support. Kishida revealed his decision not to seek re-election as leader of the Liberal Democratic Party (LDP) in a televised press conference on Wednesday, 14 August.
Kishida’s resignation triggers a race to select his successor, who will inherit the leadership of Japan, the world’s fourth-largest economy. The upcoming leadership contest is expected to address pressing issues such as rising living costs, escalating geopolitical tensions with China, and the possibility of Donald Trump’s return to the US presidency next year.
Throughout his tenure, Kishida’s popularity waned following revelations about the LDP’s connections with the controversial Unification Church and allegations of unreported political donations from party fundraising events. Michael Cucek, a professor of Japanese politics at Temple University in Tokyo, noted that Kishida’s position had become untenable, remarking, “He’s been a dead man walking for quite some time. There was no way to add up the numbers so that he would get reelected.”
As Japan’s eighth-longest-serving post-war leader, Kishida had spearheaded efforts to navigate the country through the Covid-19 pandemic with substantial stimulus packages. However, his administration’s economic policies faced challenges, particularly with the appointment of Kazuo Ueda as the new head of the Bank of Japan (BOJ). Ueda was tasked with reversing the previous administration’s aggressive monetary stimulus measures.
In July, the BOJ’s unexpected decision to raise interest rates in response to inflation triggered stock market volatility and a sharp decline in the yen. Kishida’s departure could lead to shifts in fiscal and monetary policy, potentially impacting financial markets significantly. Shoki Omori, chief Japan desk strategist at Mizuho Securities, Tokyo, suggested, “In short, risk-assets, particularly equities, will likely be hit the most.”
Breaking from traditional economic policies, Kishida focused on measures to enhance household incomes, such as advocating for wage increases and promoting share ownership, rather than relying on corporate profit-driven trickle-down economics.
