On Saturday, 04 October, Japan’s ruling Liberal Democratic Party (LDP) elected Sanae Takaichi as its new leader, setting her on course to become Japan’s first female prime minister. She is expected to assume the premiership because the LDP is the largest party in the lower house, which determines the national leader, and opposition parties are divided. Her rise comes at a period of political uncertainty, economic strain, and demographic transition that will shape Japan’s domestic and international direction.
Takaichi, a long-time member of the LDP and former Minister for Economic Security, represents the party’s conservative wing. She won the leadership after a close contest with Shinjiro Koizumi and others. Her approach is known for discipline, direct communication, and emphasis on accountability, and she has signaled willingness to pursue reforms aimed at improving public trust and administrative transparency.
Economic Vision and Policy Challenges
Takaichi’s main economic focus is on restoring public confidence and reviving growth. She has outlined a plan centered on “crisis management investment,” directing spending to sectors such as energy, biotechnology, advanced healthcare, semiconductors, and food security.
An advocate of late premier Shinzo Abe’s “Abenomics” strategy, she supports stimulating the economy through aggressive spending and accommodative monetary policy, while criticising the Bank of Japan’s (BOJ) interest rate hikes. At a press conference after her victory, she announced plans to cut taxes and expand subsidies but emphasized “the importance of fiscal prudence,” noting that BOJ policy must consider the fragility of the economy and wage growth.
Experts see her agenda as ambitious but constrained by politics. With the expansionary fiscal policy, few experts note the threat of higher inflation which may result in higher interest rates in the near time. For instance, Takahide Kiuchi, Executive Economist at Nomura Research Institute reflected this, “Takaichi has advocated the most expansionary fiscal policy. This could lead to rising interest rates, a weaker yen, and higher stock prices in financial markets. However, since the LDP is a minority ruling party in both houses of the Diet, cooperation from opposition parties is essential to implement her policies. Therefore, I expect the more extreme aspects of her proposals will be diluted during the legislative process,”
Japan faces multiple economic challenges, including a weak yen, public debt exceeding 200% of GDP, and pressures from U.S. tariffs and Chinese exports. Takaichi has stressed balancing fiscal discipline with strategic, innovation-driven investments while encouraging private-sector participation.
Political, Social, and Foreign Policy Outlook
Domestically, Takaichi inherits a weakened LDP that must negotiate with centrist and opposition parties to pass legislation. She faces the twin challenges of regaining public trust and addressing Japan’s aging and shrinking population, including support for youth, women, and families, as well as cautious engagement with immigration policy to maintain social cohesion.
On the international front, Takaichi is known for her hawkish foreign policy stance, supporting stronger national defence and maintaining close alignment with the United States. Analysts warn that her approach may raise concerns among Asian neighbours. “Her hawkish foreign policy stance may raise concerns among Asian nations,” said Kiuchi.
Her tenure will test Japan’s ability to manage demographic pressures, drive economic revitalization, and navigate ongoing geopolitical challenges simultaneously. As parliament prepares to vote for the new premier on 15 October, her appointment will make her the fourth prime minister in just five years, underscoring the country’s recent political instability. Observers will be watching closely to see whether Takaichi can unite a divided legislature and turn her policy agenda into tangible results, setting the tone for Japan’s political and economic direction in the years ahead.