Japan’s ruling coalition led by the Liberal Democratic Party has lost its majority in parliament, in a surprise vote by voters that plunged the country into political unrest.
The LDP’s worst electoral reversal in 15 years, which left the party struggling to govern and newly appointed Prime Minister Shigeru Ishiba under pressure to resign, came in a snap election which he called for to try to draw a line under the slush fund scandal.
The yen fell nearly 1% against the dollar on Monday morning on speculation that political paralysis will delay the next interest rate hike in Japan, as Ishiba and his party will begin a process It may take weeks to secure one or more coalition partners to achieve the goal. establish a government.
The loss of the coalition’s former comfortable majority is a much worse outcome for the party than most analysts had forecast and reflects growing discontent in Japan after years of gains. Stagnant wage growth combined with recent sharp increases in the cost of living.
“Looking at the results, it is true that the voters gave us a harsh verdict and we must humbly accept this result,” Mr. Ishiba told NHK television in an interview.
NHK’s seat tally showed that the LDP and its much smaller coalition partner Komeito fell short of the 233 seats needed to control Japan’s lower house. With all seats declared as of 5:45 a.m. Monday, the LDP only won 191 seats, while Komeito had 24 seats.
Economists have warned that voters’ unexpectedly harsh punishment of the LDP could cause volatility in the markets. Japanese stocks rallied on Monday, with the Nikkei 225 index up 1.7%, partly on speculation that the yen will continue to weaken.
Over the long term, however, stock strategists warn that the election results will be bad for stocks. While the LDP will remain the largest party, parliamentary paralysis could stall its expected pro-growth structural reform agenda.
“The LDP’s efforts to find a coalition partner and the potential difficulties it will cause mean that the LDP will not be able to implement policy, because So the market will be cautious in the coming weeks.” Mizuho Securities.
Analysts say the LDP’s failure to achieve a majority in the coalition will force the LDP to court parties that previously said they were not interested in a partnership with the ruling party. The LDP may also consider readmitting some members of parliament it disapproved of in this election because of their links to the government. slush fund scandal.
The rush to win allies could also force the LDP to compromise with a number of small populist parties with fundamentally different policy agendas.
Japan’s main opposition Constitutional Democratic Party, led by former prime minister Yoshihiko Noda, made big gains, winning 148 seats as of 4:30 a.m., up from 98 previously. The party has focused its campaign on public anger over the slush fund scandal.
Political analysts say losing the coalition majority will almost certainly force Mr. Ishiba to resign. was elevated to the role just a few weeks ago and who surprised many in his party by calling an election in record time. If he resigns, Ishiba will become Japan’s shortest-serving leader in the modern era.
Ishiba told NHK earlier on election night that it was too early to discuss whether he would resign and take responsibility for the harsh reversal.
The scale of the LDP’s defeat seems to open a new phase for Japanese politics and marks the decisive end of an era dominated by the policies of late Prime Minister Shinzo Abe.
Jesper Koll, an economist and long-time Japan watcher, said the outcome would increase infighting and competition within the LDP, making reform progress nearly impossible.
“In the world of currency and investment, the main pillar of the bullish thesis on Japan is that Japan is a bastion of economic and political stability. After today’s election, this will become harder to argue,” Koll said.
Overall, voter turnout was very low, partly reflecting the view among many young Japanese that mainstream politics is no longer capable of solving many of the country’s problems. Kyodo News estimates voter turnout at 53.8%, one of the lowest on record in Japan.
Retired Kimihiro Okuma, a longtime LDP supporter, said earlier in the day that he was planning to switch his vote to another party.
“As a capitalist country, we have been safe under the Liberal Democratic Party and I think that is good, but recently things have become excessive,” said Okuma, 79. years old, said. . . They have not changed the basic nature of the party and they should be punished.”
It was the LDP’s worst result since it lost power in 2009 for the Democratic Party, the predecessor of the CDPJ.
Ishiba told a rally on Saturday that the LDP, which has been in power for nearly 70 years, is facing its “first major headwind” since returning to power in 2012.
Ishiba’s unusually candid admission highlights the risk he took in calling an election just days after being sworn into office.
Instead, a move aimed at catching opposition parties off guard and ensuring public power clearly gave voters a forum to vent their discontent.
On the final day of the election, CDPJ leader Noda emphasized that the opposition party does not expect to win a majority, but the election is an opportunity to punish the LDP.
Noda said the LDP shows “no signs of remorse” over the scandal that has dominated headlines for months and called on voters to end a political era in which “the public is made to look like fools.” .
