Meet Sae Takaishi, Japan's first female prime minister, and her Abenomics 2.0 approach.
Meet Sae Takaishi, Japan's first female prime minister, and her Abenomics 2.0 strategy, which aims to focus on economic stimulus, low interest rates, and a weak yen amid a fragile economy.
On October 6, 2025, at 12:04 PM, CNBC reported that, “I will work, work, and work to transform people’s anxieties about their daily lives and the future into hope,” declared Sanae Takaichi after being elected leader of the Liberal Democratic Party (LDP), Japan’s main political party. This move prepares her to become the first female Prime Minister in the country’s history.
Takaishi's victory came at a time when Japan was facing both domestic economic pressures and strained international relations. At the same time, her rise to power was a crucial test of whether Japan would continue to adhere to the "Abenomics" principles established by former Prime Minister Shinzo Abe.
From political crisis to the rise of conservative female leaders
This LDP leadership election comes after Prime Minister Shigeru Ishiba resigned after the party lost its majority in two consecutive parliamentary terms in 2567–2568, forcing the government to run as a minority government.
Takaishi's ascension would not only mean a change in leadership, but also a major test of Japan's political stability, as the Diet convenes on October 15, 2568, with the opposition still having the right to reject the prime minister's nomination, although experts believe the risk is low.
A report from research firm BMI Research indicates that Takaishi's first task is to build a viable majority, possibly by forming an alliance with at least one opposition party. While this would increase the chances of smooth governance, it risks eroding popularity among voters dissatisfied with the incumbent LDP.
Abenomics 2.0: High-Pressure Economy or New Round of Inflation?
Takaishi is considered a clear successor to Abenomics, which emphasizes ultra-loose monetary policy combined with government spending and structural economic reforms. He has previously criticized the Bank of Japan (BOJ) for preparing to raise interest rates, arguing that the economy has not yet fully recovered. Meanwhile, BOJ Governor Kazuo Ueda insisted that the bank will set its policy without being bound by the old framework. The BOJ ended its negative interest rate policy in March 2567 and has kept its current interest rate at 0.5%.
William Pesek, an analyst and author of "Japanization: What the World Can Learn from Japan's Lost Decades," warned that "continuing with the same Abenomics will make it difficult to control inflation, as it would mean a further weakening yen, increased government spending, and potentially even hotter inflation." He added that the LDP chose Takaishi because he is considered the most capable person to handle President Donald Trump during a time of delicate trade and security relations between the United States and Japan.
Takaishi himself has said in interviews with Fuji TV that the US-Japan trade deal may need to be reconsidered, citing Japan's $550,000 billion investment pledge in the US.
The stock market is receiving positive news, but it is not without risk.
Citibank expects the Nikkei 225 to reach 47,000 points in the short term after Takaishi's election, as stimulus measures and a weaker yen will boost export-oriented stocks. However, it cautions that Japanese stocks are no longer cheap, with the Topix's 12-month P/E ratio nearing a historic high of 16.
Analysts expect consumer, defense, and export stocks to benefit, while financial and real estate sectors may face pressure from long-term low interest rates.
Foreign Affairs and Nationalism: A New Balance in the Takaishi Era
Beyond economics, Takaishi is a deeply nationalist politician who advocates amending Article 9 of the constitution, which prohibits Japan from going to war, as well as taking a tough stance against China and openly acknowledging its friendly stance towards Taiwan.
Taiwanese President Lai Ching-te posted a message on X calling Takaishi a "true friend of Taiwan" and expressing hope for further strengthening Taiwan-Japan relations.
However, her previous visits to Yasukuni Shrine, a symbol of Japan's past military brutality, have drawn ongoing criticism from China and South Korea.
Analyst Kei Okamura of investment management firm Neuberger Berman stated, "Takaishi will have to be very cautious in her diplomatic stance, especially towards China and South Korea. But she understands that good relations with all three countries, as well as the United States, are essential because they are all key export markets for Japan."
The arrival of Sae Takaishi is not just a symbol of Japan's first female leader, but also a crucial test of whether Japan will continue with the Abenomics economic model or dare to restructure in a changing world.
In the short term, she may get some support from the market and industry, but in the long term, balancing economic growth, inflation, fiscal stability and international relations will be a major test for the new Takaishi administration.
Reference: www.cnbc.com
Read related news
