Whoever replaces Mr Abe will face a general election next year.
The Nikkei fell 2.5 per cent on the news of Mr Abe’s impending resignation and the yen moved higher, signalling markets were surprised by his sudden departure and concerned about the lack of an obvious replacement and what that might mean for the direction of economic policy. The benchmark index finished Friday’s session 1.4 per cent lower.
Richard McGregor, a senior fellow at the Lowy Institute, said Mr Abe left office as the most consequential and respected leader in Asia. “He held his nerve with China and that relationship is now significantly better than in 2012 [when Tokyo and Beijing were fighting over disputed islands]”.
But Mr McGregor said Mr Abe failed to achieve his main ideological objective and enact major reforms to Japan’s post-war constitution, and his successor was unlikely to place such a high priority on the issue.
During his almost eight years in power, Mr Abe failed to revise the pacifist Article 9 of Japan’s post-war constitution, a mission which also eluded his maternal grandfather, Nobusuke Kishi, during his time as prime minister.
In a soon to be published book, Tobias Harris says Mr Abe was heavily influenced by his grandfather and determined to oversee “Japan’s return to the world of power politics”.
“His grandson [Mr Abe] inherited this vision of a strong, independent Japan
that could shed the vestiges of defeat and occupation,” Mr Harris writes in his forthcoming The Iconoclast: Shinzo Abe and the New Japan.
He did achieve some of his grandfather’s dream by strengthening Japan’s defences, boosting spending on the military after years of declines and expanding its capacity to project power abroad.
In a historic 2014 shift, the Abe government re-interpreted the constitution to allow Japanese troops to fight abroad for the first time since World War II. A year later, Japan adopted laws scrapping a ban on exercising the right of collective self-defence or defending a friendly country under attack.
As part of his efforts to have Japan play a larger role on the global stage, Mr Abe, a conservative, developed strong relations with his Australian counterparts Tony Abbott and Malcolm Turnbull, and last month he held a virtual summit with Prime Minister Scott Morrison.
Mr Abe returned as prime minister for a rare second term in December 2012, pledging to revive growth with his “Abenomics” mix of hyper-easy monetary policy, fiscal spending and reforms.
On Monday, Mr Abe surpassed the longest consecutive tenure for a Japanese premier, set by his great-uncle Eisaku Sato half a century ago.
Under fire for his handling of the coronavirus pandemic and scandals among party members, Mr Abe has recently seen his support fall to one of the lowest levels of his nearly eight years in office.
Japan has not suffered the explosive surge in virus cases seen elsewhere, but Mr Abe has drawn fire for a clumsy early response and what critics saw as a lack of leadership as infections spread.
In the second quarter, Japan was hit by its biggest economic slump on record as the pandemic emptied shopping malls and crushed demand for cars and other exports, bolstering the case for bolder policy action to avert a deeper recession.
Mr Abe resigned from his first stint as prime minister in 2007 over the same health issue after a year plagued by scandals in his cabinet and a huge election loss for his ruling party.