Japanese Prime Minister Fumio Kishida announced he will step down in September, ending his three-year term marred by political scandals.
Kishida’s decision to quit triggers a contest to replace him as leader of the ruling Liberal Democratic Party (LDP), and by extension, as the head of the world’s fourth-largest economy.
Kishida’s public support eroded amid revelations about the party’s ties to the controversial Unification Church and unrecorded political donations made at LDP fundraising parties. “There was no way to add up the numbers so that he would get reelected,” said a professor specializing in Japanese politics.
The successor the LDP chooses will have to unite the ruling group and tackle challenges such as rising living costs, geopolitical tensions with China, and the potential return of Donald Trump as U.S. president next year.
Kishida led Japan out of the COVID pandemic with massive stimulus spending but later appointed an academic tasked with ending his predecessor’s radical monetary stimulus to head the Bank of Japan.
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This contributed to stock market instability and a sharp drop in the yen.
Kishida’s departure could mean tighter fiscal and monetary conditions, according to a chief strategist, potentially impacting risk assets like equities.
