Tokyo: Japanese Prime Minister Shigeru Ishiba said on Sunday he had decided to resign, ushering in a potentially lengthy period of policy paralysis at a shaky moment for the world’s fourth-largest economy.
Ishiba, 68, instructed his Liberal Democratic Party – which has governed Japan for almost all of the post-war era – to hold an emergency leadership race, he told a press conference, adding he would continue his duties until his successor was elected.
Since coming to power less than a year ago, Ishiba has seen his ruling coalition lose its majorities in elections for both houses of parliament amid voter anger over rising living costs.
Shigeru Ishiba has announced he will step down.Credit: Bloomberg
Until Sunday, he had refused calls to step down following the latest of those losses in July’s upper house vote. Instead, he had focused on trying to iron out the final details of a deal with the United States on trade tariffs that have roiled Japan’s critical automotive industry and cast a shadow over weak growth.
“With Japan having signed the trade agreement and the president having signed the executive order, we have passed a key hurdle,” Ishiba said, his voice seeming to catch with emotion. “I would like to pass the baton to the next generation.”
Concern over political uncertainty led to a sell-off in Japan’s yen currency and its government bonds last week, with the yield on the 30-year bond hitting a record high on Wednesday.
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Speculation over Ishiba’s fate had been stoked by the LDP’s decision to schedule a vote for Monday on whether to hold an extraordinary leadership election – in what would have been a virtual no-confidence motion against him if approved.
While a fresh leadership race could add pain for an economy hit by US tariffs, markets are focusing more on the chance of Ishiba being replaced by an advocate of looser fiscal and monetary policy, such as Sanae Takaichi, who has criticised the Bank of Japan’s interest rate hikes.
