Prime Minister Sanae Takaichi’s ruling party is poised for a clear-cut win in next week’s lower house election, analysts suggest. The poll indicates a sweeping victory, increasing the likelihood of continued big-spending and tax-cut policies in Japan.
A strong performance would cement Takaichi’s leadership within the LDP. It would also give her a clear mandate to push aggressive fiscal measures. Analysts warn such policies could raise concerns over Japan’s public finances and push government bond yields higher.
Poll Shows LDP on Track for Major Gains
The Asahi poll shows the LDP likely exceeding a majority of 233 seats out of 465. Currently, it holds 198 seats. Together with its coalition partner, the Japan Innovation Party (Ishin), the ruling alliance could reach around 300 seats.
Keisuke Tsuruta, senior bond strategist at Mitsubishi UFJ Morgan Stanley Securities, said, “A huge LDP win would strengthen Takaichi’s grip on power. Markets may anticipate higher chances of her pursuing flagship fiscal policies, including a consumption tax cut.”
Government bond yields rose on Monday. Investors factored in the chance that Takaichi will secure a strong electoral mandate. Her policies, focused on higher spending and tax cuts, could impact markets and public debt expectations.
Opposition Struggles and Economic Concerns
The main opposition, the Centrist Reform Alliance, is weak. The party could lose half of its 167 seats, the Asahi poll said. Takaichi’s coalition currently has a slim majority in the lower house but only a minority in the upper house.
Takaichi dissolved parliament last month and called a snap election for February 8. She seeks a strong mandate to reflate the economy with proactive fiscal measures. Her plan to suspend the 8% food sales tax for two years triggered market concerns about Japan’s fiscal discipline.
Economists note that Japan’s public debt exceeds twice the size of its economy. Aggressive fiscal policies carry substantial financial risks. Yet, Takaichi’s message appeals to voters seeking relief from rising costs and slow economic growth.
If the polls hold, an LDP victory would allow Takaichi to advance her expansionary agenda with minimal opposition. Experts say it could usher in a period of bold fiscal measures aimed at stimulating growth while testing market expectations.
