Japanese Election Promises Greater Political Stability

Action: Election in Japan

Japanese voters gave a clear mandate to Prime Minister Takaichi Sanae and her Liberal Democratic Party (LDP), which won 316 of 465 seats in the House of Representatives, the lower house of the Diet. With its partner the Japan Innovation Party (JIP), the coalition holds 352 seats. Given the strong mandate, Takaichi will have over two years to govern until the next election for the House of Councillors (the upper house), likely without fear of losing a majority.

Trusted Insights for What's Ahead^®

• In the 2024 election for the Lower House, the LDP and its former coalition partner Komeito lost its majority. Komeito left the coalition after Takaichi took office over differences on security policy.
• Takaichi’s new coalition with the JIP easily beat the Centrist Reform Alliance (CRA) of the Constitutional Democratic Party (CDP) and Komeito. A sharp decline for the CDP among middle-aged Japanese hurt the CRA’s performance; the CDP lost 123 seats, including all but seven of the single-member district seats it held.¹
• The LDP alone, if it stays united, has over a two-thirds majority in the Lower House; with the JIP, it has 75% of seats. This would permit it, for instance, to pass budgets over the objection of the less-powerful House of Councillors.
• Takaichi promised a “responsible and aggressive fiscal policy,” including cutting the consumption tax on food. Japan may also adopt a stronger industrial policy and defense policy. The large majority also permits consideration of constitutional reform, including perhaps reform of Article 9, under which Japan renounced the right of war.² While Japan maintains increasingly strong Self-Defense Forces, constitutional revision has been a priority of some within the LDP but remains broadly unpopular with voters even as Japan has shifted to the right.
• While managing many new members of the Diet could prove challenging, it also decreases the power of older factions within the LDP while increasing Takaichi’s power, as so many members owe their seats to her.
• What this means for business: Political uncertainty in Japan with the LDP having a majority in neither house has now receded. Takaichi will have a strong mandate for whatever policies, including greater industrial policy, she wishes to take. US-Japan relations will be at the forefront as Takaichi is expected to visit Washington in March. She will come under pressure to increase Japanese investment in the US while also seeking greater clarity from the US on the extent of US commitments in the Indo-Pacific, including in the event of regional conflict. Takaichi has had difficult relations with China over comments on Taiwan early in her premiership; she will seek a strong reaffirmation of the US-Japan alliance to counter pressures from China.