The rise of Sanae Takaishi as Japan’s first female prime minister represents a historic moment for the country and the ruling Liberal Democratic Party, but one overshadowed by political fragility and economic uncertainty.
After winning the parliamentary vote with the support of the right-leaning Japan Innovation Party, Takaishi inherited a divided mandate, a skeptical electorate and markets bracing for volatility.
“Within the LDP, she has benefited from being seen as a protégé of former Prime Minister Shinzo Abe,” says Tina Porritt, a political science professor at Sophia University in Tokyo.
“Although Abe’s faction has been disbanded, its former members have served as the backbone of its leadership campaign.”
However, Burritt points out, “like Koizumi Junichiro, she takes power at a time when the LDP is unpopular. The party is more willing to take the opportunity of winning over an independent candidate when there is not much to lose.” Koizumi served as Prime Minister from 2001 to 2006.
Takaishi faces a geopolitical balancing act. A self-proclaimed admirer of Margaret Thatcher, she has pledged to double defense spending to 2% of gross domestic product by March and push through constitutional reform, moves that could strain relations with neighboring countries wary of Japan’s military past.
“A lot will depend on whether she governs as tough as she did in her campaign,” Burritt notes. “Her mentor, Abe, was more hardline in the opposition than in the government. She could soften her position on China, for example.”
Markets are watching closely. The Nikkei 225 initially rose on stimulus expectations but has since fluctuated amid uncertainty over fiscal discipline.
Takaishi’s first major initiative, a stimulus package exceeding 13.9 trillion yen (about 92 billion US dollars), reflects her commitment to proactive fiscal policy. However, its call for aggressive spending does not match its pledge to curb inflation.
For Japan watchers, the early signals are mixed. Government bond yields rose, the yen weakened, and stock markets remained sensitive to hints of policy continuity or divergence. Takaishi’s main challenge will be to reconcile her nationalist ambitions with the need to maintain market confidence, a test that will determine not only her political survival but also Japan’s economic trajectory.
