TOKYO: Japan’s ruling coalition is set to lose its parliamentary majority, exit polls for Sunday’s (Oct 27) general election showed, raising uncertainty over the make-up of the government of the world’s fourth-largest economy.
A poll by Nippon TV showed Prime Minister Shigeru Ishiba’s Liberal Democratic Party (LDP), which has ruled Japan for almost all of its post-war history, and junior coalition partner Komeito would get 198 of the 465 seats in the lower house of Japan’s parliament.
That would be well short of the 233 needed to maintain its majority and would be its worst election result since the coalition briefly lost power in 2009.
The biggest winner of the night, the main opposition Constitutional Democratic Party of Japan (CDPJ), was predicted to win 157, as voters punished Ishiba’s party over a funding scandal and inflation.
The outcome may force parties into fractious power-sharing deals to rule, potentially ushering in political instability as the country faces economic headwinds and an increasingly tense security environment in East Asia.
The election comes nine days before voters in the United States – Japan’s closest ally – head to the polls in another unpredictable ballot.
“This election has been very tough for us,” a sombre-looking Ishiba told TV Tokyo with about 40% of seats still to be declared.
He said he would wait until the final results, likely due in the early hours of Monday, before considering potential coalitions or other power-sharing deals.
A poll by public broadcaster NHK predicted his coalition would win between 174 and 254 seats, and the CDPJ 128 to 191 seats.
Ishiba called the snap poll immediately after being elected to head the party last month, hoping to win a public mandate for his premiership. His predecessor, Fumio Kishida, quit after his support cratered due to anger over a cost of living crunch and the scandal involving unrecorded donations to lawmakers.
The LDP has held an outright majority since it returned to power in 2012 after a brief spell of opposition rule. It also lost power briefly in 1993, when a coalition of seven opposition parties formed a government that lasted less than a year.
Japanese stocks and the yen are expected to fall while longer-dated government bond yields are seen rising as investors react to the uncertainty.
“The voters’ judgement on the ruling bloc was harsher than expected,” said Saisuke Sakai, senior economist at Mizuho Research and Technologies.
“Uncertainty over the administration’s continuity has increased, and the stock market is likely to react tomorrow with a sell-off, especially among foreign investors.”
POLITICAL DEALS
The exit polls suggest smaller parties, such as the Democratic Party for the People (DPP) or the Japan Innovation Party, could prove key to forming a government.
The DPP is expected to win 20 to 33 seats and the Japan Innovation Party 28 to 45 seats, according to NHK’s exit poll. But both propose policies at odds with the LDP line.
DPP chief Yuichiro Tamaki has not ruled out some cooperation with the LDP-led coalition, but Innovation Party head Nobuyuki Baba has rejected the idea.
The DPP calls for halving Japan’s 10 per cent sales tax until real wages rise, a policy not endorsed by the LDP, while the Innovation Party has pledged tougher donation rules to clean up politics.
“The DPP is focussed on ultimately making the country better and ensuring financial resources are allocated more appropriately, so that’s why I decided to vote for them,” Keisuke Yoshitomi, a 39-year-old office worker, said after casting his vote at a polling station in Tokyo.
The Innovation Party opposes further increases in interest rates, and the DPP leader has said the Bank of Japan may have been hasty in raising rates, while the central bank wants to gradually wean the Japan off decades of massive monetary stimulus.
Political wrangling could roil markets and be a headache for the Bank of Japan if Ishiba chooses a partner that favours maintaining near-zero interest rates when the central bank wants to gradually raise them.
Japanese shares fell 2.7 per cent last week on the benchmark Nikkei index after opinion polls first indicated the ruling coalition could lose its majority.
“With a more fluid political landscape, pushing through economic policies that include raising taxes, such as to fund defence spending, will become much harder,” said Masafumi Fujihara, associate professor of politics at Yamanashi University.
“Without a strong government, it would be more difficult for the BOJ to raise rates and keep the weak yen under control.”