Japanese Prime Minister Fumio Kishida announced he will resign in September, concluding a three-year term marked by political controversies and economic challenges.
Kishida, addressing the media on Wednesday, stated his decision to step down as the leader of the Liberal Democratic Party (LDP), emphasizing that “politics cannot function without public trust.”
He pledged to support his successor as a regular party member.
Kishida’s resignation will prompt a race to choose a new LDP leader, who will also become Japan’s new prime minister.
His tenure has been undermined by public dissatisfaction over the LDP’s connections to the Unification Church and unreported political donations.
Additionally, Kishida struggled with stagnant wages and rising living costs amid Japan’s economic recovery from deflation.
Political science professor Koichi Nakano likened the situation to sumo wrestling, noting that an LDP prime minister must be assured of victory before running in the presidential race.
The incoming LDP leader will need to navigate internal party divisions, address the rising cost of living, manage escalating tensions with China, and prepare for the possibility of Donald Trump’s return to the U.S. presidency.
As Japan’s eighth-longest-serving post-war leader, Kishida steered the country through the COVID pandemic with substantial stimulus spending and appointed Kazuo Ueda as head of the Bank of Japan to phase out radical monetary policies.
The BOJ’s recent interest rate hike, aimed at controlling inflation, has led to market instability and a weaker yen.
Shoki Omori, chief Japan desk strategist at Mizuho Securities, suggests Kishida’s departure could result in tighter fiscal and monetary policies, potentially impacting risk assets, especially equities.
Kishida’s economic policies diverged from the profit-driven trickle-down approach, focusing instead on boosting household incomes through wage increases and promoting share ownership.
Despite this shift, he maintained a strong security stance, continuing the militaristic policies of his predecessor Shinzo Abe, who was assassinated in 2022.
Kishida’s administration undertook Japan’s most significant military expansion since World War II, with a commitment to double defense spending to counter China’s regional ambitions.
In foreign policy, Kishida improved Japan’s relationship with South Korea and enhanced security cooperation with the U.S. to address North Korea’s missile and nuclear threats.
U.S. Ambassador Rahm Emanuel praised Kishida for strengthening the U.S.-Japan alliance.
Reporting by Tim Kelly, Sakura Murakami, Rocky Swift, and Kevin Buckland; edited by David Dolan, Stephen Coates, and Neil Fullick.
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