The unexpected resignation of the Japanese Prime Minister Shinzo Abe has put Japan in a state of confusion and has created a lot of questions in the minds of many people. As the news of the resignation spread, Japan’s benchmark Nikkei average fell 2.12 percent to 22717.02, while the Topix fell 1.00 percent to 1,599.70. The selling wiped $47 billion off Tokyo’s $5.7 trillion stock market value, which had more than doubled during Abe’s tenure.

Abe was Japan’s longest-serving premier and was widely known for introducing “Abenomics” which is a mix of easy monetary policy, fiscal spending and a growth strategy designed to jolt the economy out of suspended animation that has gripped Japan for more than two decades. The “suspended animation” dates back to the 90s also known as “The Lost Decade” when economic stagnation appeared in Japan, following a massive real estate bubble burst in the 1980s and asset price bubble burst in the early 90s. After briefly serving as a prime minister from 2006-2007, Abe began his second term in December 2012 and soon launched his ambitious plan to bolster Japan’s stagnant economy.

Abe’s term was supposed to end in September 2021. His sudden resignation will most likely trigger a leadership race in the ruling Liberal Democratic Party (LDP) to select a new party leader who will hold the post for the rest of Abe’s term. It is expected that irrespective of the winner; Abe’s reflationary “Abenomics” policies will be kept, keeping the broader picture intact and focusing on reflation.