TOKYO: Japanese Prime Minister Fumio Kishida said on Wednesday (Aug 14) he will not seek re-election as head of his party, meaning the end of his tenure as prime minister after just under three years.
The ruling Liberal Democratic Party (LDP), which has governed Japan almost uninterrupted since 1945, is due to hold an internal leadership contest next month. Its popularity ratings have slumped because of rising prices.
“In this presidential election, it is necessary to show the people that the LDP is changing and the party is a new LDP,” Kishida told reporters in Tokyo.
“For this, transparent and open elections and free and vigorous debate are important. The most obvious first step to show that the LDP will change is for me to step aside,” he said.
“I will not be running in the forthcoming presidential election.”
Kishida had informed senior administration officials of his intention not to run, media including national broadcaster NHK and Kyodo News reported earlier.
The head of the ruling party is traditionally also prime minister.
Kishida, 67, has been in office since October 2021, and has seen his poll ratings slide sharply in response to rising prices hitting Japanese incomes.
His Cabinet’s support rating has been languishing around 25 per cent this year, according to an NHK poll.
The world’s fourth-largest economy has also struggled to gain traction, with output shrinking 0.7 per cent in the first quarter.
In November, Kishida announced a stimulus package worth 17 trillion yen (more than US$100 billion at the time) as he tried to ease the pressure from inflation and rescue his premiership.
Having seen prices barely move for years, Japanese voters have been reeling from rising prices since Russia invaded Ukraine in 2022, pushing up energy costs and putting pressure on the government.
Despite some recovery in recent weeks, the yen has been one of the world’s worst-performing currencies over the past year, falling sharply against the dollar.
While welcome news to Japanese exporters, this makes imports pricier and stokes inflation for households.
Even before November, the government had injected hundreds of billions of dollars into the economy over the past three years since the COVID-19 pandemic.
As the country’s eighth-longest serving post-war leader, Kishida led Japan out of the COVID-19 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.
Kishida, who has overseen improving relations with South Korea, could in theory govern until 2025, but there was speculation that he might call a snap election.
NHK reported that voices inside the LDP have been growing that the party will not be able to fight elections under the Kishida government.
Kishida has also faced severe criticism over a major funding scandal within the party.
The prime minister “seems to have judged that he himself needs to take responsibility in order to dispel growing distrust”, NHK said.
Kishida’s 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.
The successor the LDP chooses could face increases in living costs, escalating geopolitical tensions, and the potential return of Donald Trump as US president next year.
