Japan's minority government faces election snub as economic storm brews

19/7/2025 13:52

Japan's shaky minority government is poised for another setback in an upper house vote on Sunday, an outcome that could jolt investor confidence in the world's fourth-largest economy and complicate tariff talks with the United States.



Prime Minister Shigeru Ishiba's Liberal Democratic Party (LDP), which has ruled for most of the post-war period, and its partner Komeito, are forecast to lose their majority in a repeat of last year's election for the more-powerful lower house.



The ruling coalition needs to win 50 seats of the 125 up for grabs in order to retain its majority. While the vote will not directly determine whether Ishiba's government falls, investors are nervous it will leave him beholden to opposition parties advocating fiscal largesse that could exacerbate mass selling of Japan's government bonds.



In a worst case scenario, some analysts say Ishiba may have to resign, unleashing political drama as Tokyo heads for an August 1 deadline to win reprieve from punishing import levies set by its largest trading partner, the United States.