Sanae Takaichi has been elected president of Japan’s ruling Liberal Democratic Party (LDP), setting her up to become the country’s first female prime minister.
Her victory marks a historic moment but also ushers in a turbulent period for Japan’s politics and economy.
A long-time ally of late Prime Minister Shinzo Abe, Takaichi inherits his conservative brand of nationalism and his economic agenda. She pledged to “turn people’s anxieties into hope,” promising stability after the LDP’s recent electoral setbacks.
Economic test
Takaichi is expected to double down on Abenomics, a mix of loose monetary policy and government spending. Economists warn the approach risks fuelling inflation and weakening the yen.
“She won’t bring inflation down,” said William Pesek, author of Japanization. “If she’s going to double down on Abenomics, that means a weaker yen, more government spending, and arguably higher inflation.”
Markets are watching closely. Citi analysts predict the Nikkei 225 could climb toward 47,000, but note valuations are stretched, with the Topix at nearly 16 times forward earnings. Exporters and defence firms may benefit, while banks and property developers could lose out if rates stay low.
Foreign policy challenges
Takaichi’s hawkish stance on China and strong support for Taiwan are expected to draw scrutiny abroad. She has often visited the controversial Yasukuni Shrine, which angers Beijing. Taiwanese President Lai Ching-te hailed her as a “staunch friend,” while China has issued cautious statements.
Analysts believe her leadership offers stability in ties with Washington, where U.S. President Donald Trump has pressed Tokyo on trade. Japan has pledged $550 billion in U.S. investment, and strong relations are seen as key to growth.
“She was probably the best option to face off with Trump at this tense moment between the U.S. and the rest of the world,” said Pesek.
Governing hurdles at home
Despite the symbolic milestone, Takaichi faces immediate challenges. The LDP lost ground in recent elections and will need support from opposition parties to govern effectively.
Research firm BMI said her priority will be coalition-building. “Her ability to govern will depend on how quickly she can strike a deal with opposition parties,” its analysts said.
Observers say her historic election signals continuity more than change: fiscal expansion, export-driven growth, and conservative diplomacy. The test now is whether Japan’s first woman leader can deliver results in an era of inflation, shifting alliances, and political fragmentation.
Leave a Reply