Tokyo: Japanese Prime Minister Fumio Kishida will step down as ruling party leader in September, media reported on Wednesday, ending a three-year term during which he pushed for higher wages and ramped up defence spending. Kishida, who saw his public support erode amid a series of scandals and amid political squabbling, will not seek re-election as the Liberal Democratic Party (LDP) leader, local media, including public broadcaster NHK, reported citing senior administration staff.
His decision to quit will trigger a contest to replace him as party boss, and by extension as the leader of the World's fourth-biggest economy. His successor will face rising living costs, escalating geopolitical tensions, and the potential return of Donald Trump as US president next year.
Kishida's role during COVID
As the country's eighth-longest serving post-war leader, Kishida led Japan out of the COVID pandemic with massive stimulus spending, but later appointed Kazuo Ueda, an academic tasked with ending his predecessor’s radical monetary stimulus, to head the Bank of Japan (BOJ). The BOJ in July unexpectedly raised interest rates, contributing to stock market instability and sending the yen sharply lower.
If the "reporting is accurate, we should expect tighter policy or neutral but slightly tighter fiscal, monetary conditions depending on the candidate", said Shoki Omori, chief Japan desk strategist, Mizuho Securities, Tokyo.
"In short, risk-assets, particularly equities, will likely be hit the most," he added. In another break from the past, Kishida also eschewed corporate profit-driven trickle-down economics in favour of policies aimed at boosting household incomes, including wage hikes and promoting share ownership.
Japan scandals
Kishida, stung by his party’s corruption scandals, has suffered dwindling support ratings that have dipped below 20 per cent. Kishida was set to explain his decision in a press conference later Monday. Since the corruption scandal broke, Kishida has removed a number of Cabinet ministers and others from party executive posts, dissolved party factions that were criticized as the source of money-for-favor politics, and passed a law tightening political funds control law. But support for his government has dwindled.
The scandal centres on unreported political funds raised through tickets sold for party events. It involved more than 80 LDP lawmakers, mostly belonging to a major party faction previously led by assassinated former Prime Minister Shinzo Abe. Ten people — lawmakers and their aides — were indicted in January.
(With inputs from agencies)
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