Japan could get its first woman prime minister as Sanae Takaichi leads the polls. But it's far from a done deal
News Summary
Japanese Prime Minister Shigeru Ishiba has resigned, citing responsibility for a series of election losses and a cost of living crisis, opening up the race for the country's next leader. Two prominent contenders have emerged: former economic security minister Sanae Takaichi and current agriculture minister Shinjiro Koizumi. Recent polls show Takaichi leading with 23% support, marginally ahead of Koizumi's 22%. Takaichi is described as an "apostle of Abenomics," advocating for large-scale fiscal stimulus and having previously criticized the Bank of Japan's rate hikes as "too early." Koizumi, in contrast, has been less outspoken on policy but gained prominence for his handling of Japan's rice crisis. Analysts suggest Takaichi has "radical" policy ideas and a strong implementation team, while Koizumi is seen as a "safe pair of hands" who could more easily build consensus with opposition parties. Crucially, the ruling Liberal Democratic Party (LDP) and its junior coalition partner Komeito have lost their majority in both houses of parliament. This implies that the winner of the LDP leadership race may not automatically become prime minister, as opposition lawmakers could, if united, choose the next leader, though this scenario is considered unlikely.
Background
The resignation of incumbent Japanese Prime Minister Shigeru Ishiba concludes his relatively short tenure. He attributed his departure to the ruling party's losses in a series of elections and took responsibility for Japan's cost of living crisis, exemplified by rice prices seeing their highest rate of increase in over 50 years in June 2025. During his time, Japan also finalized a trade deal with the US, establishing a 15% baseline tariff on all Japanese exports to the US, including the auto sector, which Ishiba cited as a key hurdle overcome. His resignation also follows the LDP and junior coalition partner Komeito losing their majority in both Japan's upper and lower houses of parliament, complicating the future political landscape.
In-Depth AI Insights
Will Sanae Takaichi's 'Abenomics' approach effectively address Japan's current economic challenges, especially amid global inflation and the Bank of Japan's policy normalization? - Takaichi's stance on large-scale fiscal stimulus and postponing BOJ rate hikes could clash with the Bank of Japan's current path towards unwinding ultra-loose policies. This divergence might create coordination challenges between monetary and fiscal policy, potentially impacting market confidence in the Japanese economy. - Her preference for "radical" policies, such as constitutional revision (especially Article 9), could become politically divisive, diverting government attention from economic reforms and potentially affecting international investors' perception of Japan's stability. - Pursuing growth through aggressive fiscal expansion and accommodative monetary policy could exacerbate Japan's public debt issues and potentially lead to higher-than-expected inflation, eroding consumer purchasing power. Given the LDP's loss of parliamentary majority, if Shinjiro Koizumi is elected, will his 'vacuous' policy stance and consensus-building strategy be an opportunity or a challenge for long-term structural reforms? - Koizumi's described lack of specific policy stances might make him more amenable to compromise when necessary, facilitating the passage of short-term policies in a fragmented political landscape. This could be an advantage for legislation requiring cross-party support. - However, a lack of clear policy direction and strong reform impetus could lead to slow progress in addressing Japan's long-term challenges like an aging population and structural rigidities, potentially missing opportunities for reform and hindering long-term economic growth potential. - His image as a "safe pair of hands" might stabilize the political situation, but for investors, it could signify policy uncertainty and a lack of clear growth catalysts. How will the choice of Japan's next prime minister impact its relationships with the United States and other key trading partners, especially within the current global geopolitical context? - The Ishiba administration has already finalized a trade agreement with President Trump's US government, establishing a 15% baseline tariff. While the next PM cannot easily undo signed agreements, their stance on foreign and trade policy remains crucial. - Takaichi's support for constitutional revision, particularly Article 9, could signal a more assertive stance in Japan's security and defense. This might be welcomed by hawkish elements in the US but could raise concerns among regional neighbors and affect Japan's economic cooperation in Asia. - If Koizumi forms a government through consensus-building, his moderate international image might help maintain regional stability and multilateral trade relationships. However, his lack of assertive policy stances could be perceived as a weakness when responding to US pressure or other geopolitical challenges.