Japan’s Ruling Coalition Faces Tough Election as Economic Pressures Mount

Japan’s ruling coalition, led by Prime Minister Shigeru Ishiba’s Liberal Democratic Party (LDP) and its partner Komeito, is bracing for a potential setback in the upcoming upper house elections scheduled for July 20. With 125 of the 248 seats up for grabs, the coalition must secure at least 50 to maintain a legislative majority—an outcome that now appears increasingly uncertain.

A poor electoral showing would not immediately topple the government, but it could deepen political instability and dent investor confidence. Analysts suggest that a major loss could prompt Ishiba to consider resignation, especially as Japan faces growing economic challenges.

Rising inflation, particularly surging rice prices, and looming U.S. tariff threats are fuelling public discontent. The opposition has capitalized on this frustration, campaigning on promises of tax cuts, increased welfare spending, and direct financial support to households.

Adding to the volatility is the rapid rise of the far-right Sanseito party, known for its nationalist rhetoric and anti-immigration stance. Projected to win between 10 and 15 seats, the party’s growing influence threatens to reshape mainstream political discourse in Japan.

Meanwhile, markets are reacting nervously. Yields on Japanese government bonds have reached their highest levels since 2008, and the yen continues to weaken amid investor concerns over possible fiscal loosening and ballooning debt.

Amid this tense backdrop, Prime Minister Ishiba has paused campaign activities to engage in crucial trade talks with U.S. officials, aiming to avert damaging tariffs before the August 1 deadline. The outcome of the elections could not only determine the future of Ishiba’s leadership but also Japan’s economic trajectory and its approach to global trade and domestic reform.

The coming days are expected to be pivotal in shaping Japan’s political and economic future.