Tokyo, Sept 7 – Japanese Prime Minister Shigeru Ishiba announced his resignation on Sunday, signaling a period of political uncertainty for the world’s fourth-largest economy. The 68-year-old leader has asked the ruling Liberal Democratic Party (LDP) to hold an emergency leadership election and said he will remain in office until a successor is chosen.
Ishiba’s resignation follows a string of election losses for the LDP, which no longer holds a majority in either house of parliament. Public frustration over rising living costs and a sluggish economy contributed to the defeats. Despite mounting pressure, Ishiba had resisted calls to step down until now, focusing instead on finalizing a trade agreement with the United States that aimed to address tariffs threatening Japan’s key automotive sector.
“With the trade agreement signed and the executive order issued by the U.S. president, we’ve cleared a major hurdle,” Ishiba said emotionally during a press conference. “It’s time to hand over leadership to the next generation.”
Financial markets reacted nervously in recent days to the political instability. The yen weakened and government bond yields rose, with the 30-year bond yield hitting a record high last Wednesday.
The LDP is set to vote Monday on whether to move forward with a snap leadership contest. Among the leading contenders are Sanae Takaichi, a fiscal conservative critical of recent interest rate hikes by the Bank of Japan, and Shinjiro Koizumi, a rising political star and current farm minister who has been tackling food price inflation.
Ishiba narrowly defeated Takaichi in last year’s leadership run-off, but her stance favoring looser fiscal and monetary policy could appeal to party members and markets. Koizumi, known for his media appeal and political lineage, is seen as a more moderate choice who is unlikely to make radical changes.
“With repeated electoral setbacks, Ishiba’s resignation had become unavoidable,” said Kazutaka Maeda, an economist at Meiji Yasuda Research Institute. “The choice of successor could significantly impact Japan’s fiscal direction, especially if Takaichi wins.”
Given the LDP’s lack of majority in parliament, the new party leader is not guaranteed to become prime minister. Analysts say the next leader may call a snap general election to seek a broader mandate.
