In a recent development, Japanese Prime Minister Fumio Kishida has declared his intention to step down in September. This announcement has drawn a range of responses from government officials and analysts alike.
What Happened: Kishida’s decision to not contest in the upcoming reelection as the leader of Japan’s ruling Liberal Democratic Party (LDP) sets the stage for a new prime minister to guide the world’s fourth-largest economy.
William Pesek, author of “Japanization: What the World Can Learn from Japan’s Lost Decades,” compared Kishida’s move to U.S. President Joe Biden’s recent withdrawal from the presidential race.
“In many ways, Prime Minister Kishida, I see this as a kind of a Joe Biden moment where he has…looked around and made the adult decision of realizing that ‘the election is coming up, my party is in some way on the ropes, and let me make the best decision for the country and to the party and allow them to come up with a new face to run this election,'” Pesek said, CNBC reported on Wednesday.
While Biden’s withdrawal was a result of a poor debate performance, Kishida’s term was tainted by a scandal involving his party and an economy vulnerable to deflationary pressure.
However, Pesak dismissed that there the economic performance of the country had a bigger role to play in Kishida’s decision than any scandal.
“The Japanese are looking at Prime Minister Kishida and realizing that 1,045 days into his premiership, [and] his biggest economic reform, arguably, was an increase in the minimum wage to about $7 an hour,” he said.
“And if that’s your biggest accomplishment…perhaps it is the moment for you to look around and be the adult in the room and say ‘I’m not getting things done.'”
Kishida emphasized the need for the LDP to regain public trust with a new leadership face at a press conference, as per a Reuters translation.
Why It Matters: Kishida’s decision to step down follows a tumultuous period for Japan’s economy. Earlier this month, Japan’s stock market indices fell over 12% in a single day, marking its worst crash since 1987. This crash was triggered by the Bank of Japan’s decision to raise the policy rate to 0.25%, only the second time in 17 years.
Kishida’s decision not to seek re-election will trigger a leadership contest within the LDP. This contest will determine the new leader of the world’s fourth-largest economy. Kishida’s decision to step down after a three-year term in office has significant implications for the political landscape of Japan and its economic future.
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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
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