Japan names Kishida as new prime minister; lifts state of emergency

Author: Pearl Bantillo

2021/10/04

SINGAPORE (ICIS)--Fumio Kishida formally took office on Monday as Japan’s 100th prime minister, succeeding Yoshihide Suga, who resigned after just a year in the post amid criticisms over his administration’s handling of the pandemic.

Kishida - 64, and Japan’s foreign minister from 2012-2017 - won as leader of Japan’s ruling Liberal Democratic Party in an election last week.

According to media reports, Kishida will dissolve the parliament, also known as Diet, next week and call for an election on 31 October. The four-year term of the Lower House expire on 21 October.

His predecessor, Suga decided in early September not to run for re-election as party leader, effectively resigning as government leader of the world’s third-biggest economy.

Suga was also criticized for pushing for the Tokyo Olympics 2020 amid the pandemic.

On 1 October, the country lifted its state of emergency across various prefectures which had been in place for six months, taking into account a sharp decline in daily new COVID-19 cases.

“We expect that the recent decline in Covid cases and the easing of restrictions since Oct 1 will support the nonmanufacturing sector in the coming months,” said Norihiro Yamaguchi, senior economist at UK-based research firm Oxford Economics, said in a recent note.

Daily COVID-19 cases have declined sharply to just above 1,000 in late September from 25,000 in mid-August.

As of 1 October, confirmed COVID-19 cases in Japan stood at more than 1.7m, with 17,648 deaths, according to data from the World Health Organization (WHO).

“In contrast, supply chain disruptions and softening external demand will continue to weigh on the manufacturers,” the economist said.

Business sentiment in Japan improved in September, based on the central bank’s latest Tankan survey.

“Among manufactures, sentiment improved in those sectors related to capital goods and basic materials, whereas it significantly weakened in the auto sector,” Yamaguchi said.

Japan’s Toyota Motor Corp, the world’s biggest car maker, conceded to a steep decline in production in September due shortage of semiconductor chips amid a disrupted supply chain in southeast Asia.

“Though a decline in mobility did not result in a deterioration in sentiment in the nonmanufacturing sector, it remained at a low level,” Yamaguchi said.

Manufacturing activity in Japan remained in expansion mode in September, with a purchasing managers index (PMI) reading of 51.5, but represents a deterioration from August’s 52.7.

Focus article by Pearl Bantillo

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