Japan will elect a brand new prime minister tomorrow, what to know?

Japan’s ruling LDP party will go to the polls tomorrow to decide their next leader and who will be the next prime minister for the country. After the upper house election humiliation in July, incumbent prime minister Shigeru Ishiba has finally decided to step down. And so, now is the time for the party to try and win back public opinion with their next choice.

So, who are the frontrunners heading into the vote tomorrow?

The two heavyweight names are Sanae Takaichi and Shinjiro Koizumi. They are the leading favourites to win with the potential for it to end up going down to another runoff vote between the two.

In fact, Takaichi was part of that last year as she only lost out to Ishiba in the runoff vote after having came out on top in the preliminary round. If she succeeds this round, she will be Japan’s first ever female prime minister.

Takaichi is often dubbed as Shinzo Abe’s protégé and has a firm agenda of pushing for a return of “Abenomics”. The current government has a more strict approach on the fiscal side of things but Takaichi will be one to pursue a more pro-stimulus approach. So, that is one to look out for.

And at the same time, that could see her call for monetary policy to also stay looser which is a departure from what the BOJ has been pushing for in recent times.

So, the potential “conflict” here is one to watch out for if Takaichi does indeed win out in the vote tomorrow.

As for Koizumi, victory will see him become Japan’s youngest prime minister in the post-war era. He is the son of popular former prime minister, Junichiro Koizumi, and he also finished third in last year’s running.

He holds a more moderate voice and wants to push forward with reforms to freshen up the party. But on market policy, he mainly just vowed to bolster productivity and wages in order to counter inflation.

So, there might not be a big change here if he wins out. In other words, there will likely be less interference to the current stance of the BOJ.

The other notable contender outside of these two is current chief Cabinet secretary, Yoshimasa Hayashi. He’s not exactly regarded in the favourite category per se but could actually surprise in the votes tomorrow. He has garnered the reputation of being the ‘handyman’ in Japan’s political circle, having occupied multiple key roles in the government when called upon.

He’s mostly just a steady hand though and it remains to be seen if that is what the party really needs in a time like this, especially since it is losing favour among the younger generation.

But regardless of who wins out, there’s going to be a lot of work that needs to be done. The immediate picture is having to stay aligned with the BOJ on policy steps and also having to deal with trade politics with the US. As for the longer-term outlook, there’s still no solution to Japan’s aging demographic and that is one that will continue to weigh on the economic future of the country day by day as time goes on without any significant change.