Japanese Prime Minister Shigeru Ishiba announced on Sunday that he would step down from office, triggering an emergency leadership race within the ruling Liberal Democratic Party (LDP) and raising concerns over fresh political instability in the world’s fourth-largest economy.
Ishiba, 68, who has been in power for less than a year, told a press conference in Tokyo that he had instructed the LDP to organise an urgent vote to select his successor. He pledged to continue his duties until the handover is complete.
“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 faltering with emotion. “I would like to pass the baton to the next generation.”
The announcement comes after a string of electoral defeats for Ishiba’s coalition, which lost its majorities in both houses of parliament amid growing voter discontent over rising living costs. Until Sunday, he had resisted calls to resign, insisting on completing negotiations with the United States over tariffs that threatened Japan’s vital automotive industry.
Ishiba’s decision followed weeks of speculation after the LDP scheduled a vote on whether to hold an extraordinary leadership election. His resignation immediately rattled financial markets, with concern over policy uncertainty contributing to a sell-off in the yen and government bonds last week.
Possible Successors
Attention has now shifted to possible replacements. LDP veteran Sanae Takaichi, who has been critical of the Bank of Japan’s interest rate hikes and advocates for more expansionary fiscal policy, is seen as a strong contender. Ishiba only narrowly defeated her in last year’s party leadership run-off.
Another potential successor is Shinjiro Koizumi, the popular farm minister and son of former Prime Minister Junichiro Koizumi. Koizumi has gained recognition for his efforts to address soaring food prices.
“Given the political pressure mounting on Ishiba after the LDP’s repeated election losses, his resignation was inevitable,” said Kazutaka Maeda, economist at the Meiji Yasuda Research Institute. “As for potential successors, Koizumi and Takaichi are seen as the most likely candidates. While Koizumi is not expected to bring major changes, Takaichi’s stance on expansionary fiscal policy and her cautious approach to interest rate hikes could draw scrutiny from financial markets.”
Analysts warn that, since the LDP no longer holds a majority in either house of parliament, the party cannot guarantee its next leader will automatically become prime minister. A snap election could be called to secure a mandate.
Last Act in Office
Ishiba’s final major act in office was to seal a $550 billion investment pledge with the United States in exchange for tariff reductions from President Donald Trump an agreement seen as vital for Japan’s troubled economy.
