Japan’s PM Yoshihide Suga to resign after failing to control Covid outbreak

Departure of premier after one-year tenure may herald new era of turmoil for Japanese politics

Japanese prime minister Yoshihide Suga is to step down as after just a year in office, risking a return to the shortlived premierships that once characterised the country's politics.

Mr Suga, whose popularity plummeted after he failed to rein in the Covid-19 outbreak, announced on Friday he would not seek re-election in this month’s leadership race for the ruling Liberal Democratic party. The winner of that contest will lead the party in a general election that must be held by November 30th.

“I did consider running, but it requires enormous energy to do coronavirus measures as well as an election campaign. I cannot do both. I must focus on Covid-19 measures,” Mr Suga said.

The news extended a rally in Japanese stocks that took the benchmark Topix to a 30-year high, as traders bet that the change of leadership would usher in greater stimulus.


Analysts said Mr Suga's exit would herald another era of uncertainty and turmoil for Japanese politics after a long period of stability under former prime minister Shinzo Abe, who stepped down on health grounds just over a year ago.

"We will be entering a transition period," said Masatoshi Honda, a political analyst and academic. "It will be a while until we see another long-lasting administration that is stably led by one person or group."

Mr Suga’s approval rating has fallen below 30 per cent, stoking concerns that the LDP would face a tough general election, with many of the country’s big cities still under a Covid state of emergency.

When the premier's poll ratings failed to recover after the Tokyo Olympics, his influence began to drain away. Increasingly powerful rivals including Fumio Kishida, a former foreign minister, launched leadership challenges.

With Mr Suga out of the running, contenders from other factions of the LDP are set to join the race. Vaccines minister Taro Kono, a fluent English speaker who has served as defence and foreign minister and is popular in opinion polls, indicated he was weighing a bid.

Sanae Takaichi, who held several cabinet positions under Mr Abe, also said she would take part in the leadership election. Analysts said other potential candidates include ex-defence minister Shigeru Ishiba, environment minister Shinjiro Koizumi, and even Mr Abe himself.

The party election is expected to take place on September 29th.

Powerful factions

The LDP's factional politics will probably play a decisive role, with the winner needing a coalition of support across the party. Most significant is the 96-member faction associated with Mr Abe and the 55-member bloc led by Taro Aso, the finance minister.

Mr Suga, who does not belong to any LDP faction, won a landslide victory last year to lead the LDP by garnering support of powerful factions who wanted continuity. But while he was competent as chief cabinet secretary, critics said he lacked the charisma and communication skills to connect with voters.

In the past week alone, Mr Suga appeared increasingly vulnerable. Mr Kishida, normally the low-profile and soft-spoken politician, declared his bid for leadership with a shocking pledge to remove Toshihiro Nikai, the party’s powerful secretary-general and the godfather of LDP politics.

Mr Kishida’s gamble proved surprisingly popular with younger LDP parliamentarians dissatisfied with Mr Nikai’s long reign.

Equity traders in Tokyo said that in the short-term, investors would probably welcome the news of Mr Suga’s departure. Despite weeks of mounting uncertainty over the prime minister’s political future and the potential end of his supposedly reformist agenda, Japanese equities have enjoyed a sustained rally since August 20th.

Takeo Kamai, head of execution services at CLSA in Tokyo said: "The next question the markets will focus on will be how many seats the LDP may lose at the general election but, in the short-term, I think investors are going to welcome this and the chance that someone like Kishida comes in with a lot more stimulus".

Mr Kishida has said he would roll out an economic stimulus package worth “several tens of trillion yen” if he won the LDP race. But longer-term, investors expect his economic policies to veer away from Abenomics, which was characterised by bold monetary easing and flexible fiscal policy.

The yen slipped below ¥110 against the US dollar on the news, well within the range of recent trading. But traders expected that it would continue to weaken until Japan’s next leader was chosen. – Copyright The Financial Times Limited 2021