Japan PM Abe set to resign over worsening health -source

Prime Minister Shinzo Abe, Japan's longest serving premier, is set to resign due to worsening health, ending a stint at the helm of the world's third-biggest economy during which he sought to revive growth, bolster defence and boost its global profile.

“The resignation is a done deal,” said a source close to a senior official in Abe's Liberal Democratic Party (LDP).

Domestic media also reported that Abe had decided to resign.

Abe has battled the disease ulcerative colitis for years and two recent hospital visits within a week had fanned questions on whether he could stay in the job until the end of his term as ruling party leader, and hence, premier, in September 2021.

Abe did not want to cause trouble by resigning suddenly but his condition had recurred and was at risk of worsening, the Jiji news agency quoted him as saying.

As the news spread, Japan's benchmark Nikkei average fell 2.12% to 22,717.02, while the broader Topix shed 1.00% to 1,599.70.

The resignation will trigger a leadership race in the LDP, the winner of which must be formally elected in parliament. The new party leader will hold the post for the rest of Abe's term.

Whoever wins the party poll is likely to keep Abe's reflationary “Abenomics” policies as Japan struggles with the impact of the novel coronavirus, but may have trouble emulating the political longevity that may be Abe's biggest legacy.

“The broad picture remains intact. In terms of economic and fiscal policy, the focus remains very much on reflation,” said Jesper Koll, senior adviser to asset manager WisdomTree Investments.

“Longevity will be a struggle.” On Monday, Abe surpassed a record for longest consecutive tenure as premier set by his great-uncle Eisaku Sato half a century ago.

Abe's resignation also comes amid an uncertain geopolitical environment, including an intensifying confrontation between the United States and China and ahead of the U.S. presidential election in November (REUTERS)