Turmoil in Tokyo: PM Ishiba's Resignation Signals Uncertain Future

In a significant political development, Japan's Prime Minister Shigeru Ishiba announced his resignation on Sunday, which could lead to a prolonged period of policy stagnation at a precarious time for the world's fourth-largest economy. The announcement triggered an emergency leadership race within the ruling Liberal Democratic Party (LDP), the political backbone of Japan's post-war governance.

Having assumed office just under a year ago, Ishiba faced mounting criticism after his coalition lost majorities in parliamentary elections. Despite earlier resistance, he chose to step down after completing a crucial trade agreement with the United States aimed at alleviating tensions over tariffs impacting Japan's automotive sector. Markets responded with a sell-off in yen and government bonds amid political uncertainty.

As speculation builds over his successor, possible contenders like Sanae Takaichi and Shinjiro Koizumi emerge, each representing different economic policies. Takaichi favors a more lenient fiscal approach, scrutinized by financial markets, while Koizumi is known for his efforts to control soaring prices. The LDP's internal vote on leadership will shape Japan's political and economic landscape amid challenges such as uncertain economic growth and rising political pressure.

(With inputs from agencies.)