Facing scandal and dwindling polls, Japan's PM Kishida to step down

Japanese Prime Minister FumioKishidasaid he will step down in September, ending a three-year term marred by political scandals and paving the way for a new premier to address the impact of rising prices.

"Politics cannot function without public trust,"Kishidasaid in a press conference on Wednesday to announce his decision not to seek re-election as the Liberal Democratic Party (LDP) leader.

"I will now focus on supporting the newly elected LDP leader as a rank-and-file member of the party," he said.

His decision to quit triggers a contest to replace him as president of the party, and by extension as the leader of the world's fourth-biggest economy.

Kishida's public support has been sliding amid revelations about the LDP's ties to the controversial Unification Church and political donations made at party fundraising events that went unrecorded.

But he also faced public discontent over the failure of wages to keep track with the rising cost of living as the country finally shook off years ofdeflationary pressure.

"An LDP incumbent prime minister cannot run in the presidential race unless he's assured of a victory. It's like the grand champion yokozunas of sumo. You don't just win, but you need to win with grace," said Koichi Nakano, a political science professor at Sophia University in Tokyo.

Whoever succeedsKishidaas the head of the LDP will have to unite a fractious ruling group and tackle the rising cost of living, escalating geopolitical tensions with Chinaand the potential return of Donald Trump as U.S. president next year.

Led Japan out of pandemic

As the country's eighth-longest-serving postwar leader,Kishidaled Japan out of the COVID-19 pandemic with massive stimulus spending. He also appointed Kazuo Ueda as head of the Bank of Japan, an academic tasked with ending his predecessor's radical monetary stimulus.

In July, the bankunexpectedly raised interest rates as inflation took hold, contributing to stock market instability and sending the yensharply lower.

WATCH | Kishida pushes nuclear disarmament at G7:

Japan's PM pushes nuclear disarmament at G7 summit

1 year ago

Duration 2:00

As the G7 summit gets underway in Hiroshima, Japanese Prime Minister Fumio Kishida uses the summit venue the site of the world's first nuclear weapons attack to push for disarmament.

Kishida's departure could mean tighter fiscal and monetary conditions, depending on the candidate, according to Shoki Omori, chief Japan desk strategist at Mizuho Securities in Tokyo.

"In short, risk assets, particularly equities, will likely be hit the most," he said.

In another break from the past,Kishidaalso eschewed corporate profit-driven trickle-down economics in favour of policies aimed at boosting household incomes, including wage hikes and promoting share ownership.

Increased defence spending

Despite that departure on the economy, he stuck with the hawkish security policies of predecessor Shinzo Abe, who was assassinated in 2022.

Kishidaunveiled Japan's biggest military buildup since the Second World War, with a commitment to double defence spending aimed at deterring neighbouring China from pursuing its territorial ambitions in East Asia through military force.

With prodding from Washington,Kishidaalso mended Japan's strained relations with South Korea, enabling the two countries and the U.S.to pursue deeper security co-operation to counter the threat posed by North Korea's missile and nuclear weapons programs.

"Under Prime MinisterKishida's steadfast leadership, Japan and the United States have ushered in a new era of relations for the Alliance," U.S. Ambassador Rahm Emanuel said in a post on X, formerly known as Twitter.