TOPSHOT – Officials watch people cast their votes during the general election at a polling station set up at a local school in Tokyo on October 27, 2024. The leaders, the Liberal Democrats, could face their worst result since 2009.
Richard A. Brooks | AFP | Getty Images
Japanese voters will decide the fate of Prime Minister Shigeru Ishiba’s government in an election expected to punish his coalition over a financing scandal and inflation and threaten to end a decade of dominance by his Liberal Democratic Party.
Polls suggest the Liberal Democratic Party and its long-time partner Komeito will suffer a heavy setback from voters, with the alliance likely to lose its parliamentary majority as Japan grapples with rising costs of living and growing tensions with neighboring China.
Losing the House majority would force Ishiba, who has been in office just a month, to negotiate power-sharing with smaller parties, creating uncertainty in some policy areas, although no polls predict the LDP will be ousted.
If Ishiba chooses a partner that supports keeping interest rates near zero as the BOJ looks to gradually raise them, the political wrangling could roil markets and create a headache for the BOJ.
“His position as a leader will be significantly weakened and his party will be weakened on the policies that it particularly wants to focus on because bringing in a coalition partner will result in them having to make certain compromises with that party, whatever that party is. Which party is,” said Jeffrey Hall, an expert on Japanese politics at Kanda University of International Studies.
An Asahi Shimbun survey last week showed the LDP could lose as many as 50 of the 247 seats in the lower house, while Komeito’s seats could fall below 30, leaving the alliance with less than what it needs to win a majority. 233 seats required.
“This is basically a ‘sell Japan’ scenario,” said Naka Matsuzawa, chief macro strategist at Nomura Securities. “Investors are thinking about how the outcome will affect fiscal and monetary policy.” Japan’s benchmark index fell 2.7% last week Nikkei Index index.
Polls show the LDP will remain the largest force in parliament, but it is likely to lose many votes to the second-placed party, the Cadet Party, which overthrew the LDP in 2009. The Asahi Shimbun said China is expected to Democrats could win by as many as 140 seats.
Alliance headache
With nine days left before U.S. voters elect a new president, Japan’s election appears to indicate Ishiba miscalculated in asking voters for a verdict on a scandal over unrecorded donations at a Liberal Democratic Party fundraiser.
After purging some LDP members, Ishiba said he considered the case closed and did not rule out awarding government jobs to disgraced politicians, which could anger voters, experts said.
Potential coalition partners could be the Democratic Party of Japan (DPP) and the Japan Innovation Party, but both propose policies that are inconsistent with the LDP line.
The Democratic Progressive Party has called for Japan’s 10% sales tax to be halved until real wages rise, but the LDP has not endorsed the policy, while the Innovation Party has promised stricter donation rules to clean up politics.
The Innovation Party opposes further interest rate increases, the leader of the Democratic Progressive Party says the central bank may raise rates too hastily, while the Bank of Japan wants to gradually wean the world’s fourth-largest economy away from decades of monetary stimulus.
Keisuke Yoshitomi, a 39-year-old office worker, said after voting in a poll: “The DPP’s focus is to ultimately make the country better and ensure that financial resources are distributed more appropriately, so I decided to vote for them .
On a sunny morning, Takeshi Ito, a 38-year-old infrastructure company manager who was voting at the same station, said he would stick with the Liberal Democratic Party, which has governed Japan for almost the entire postwar period.
“Even if I switch to the opposition, it’s still unclear whether they will be able to move forward with reforms, and I don’t know if I can trust them at this point,” Ito said.
“So I would like to see the ruling party move on.”
According to a poll by public broadcaster NHK, nearly 40% of voters said they were most concerned about the economy and the cost of living. The survey found that 28% want tax cuts and 21% want to see continued wage increases.
All parties have pledged to raise wages, a move that could win votes but also threaten small businesses struggling to keep up with rising costs.
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