Japan’s prime minister, Fumio Kishida, has said he will not run for the presidency of his ruling Liberal Democratic party [LDP] next month – a decision that will see the appointment of a new leader of the world’s fourth-biggest economy. Kishida, who has been battling low approval ratings and a damaging funding scandal, said he would step down as LDP leader in September, telling reporters on Wednesday that the party needed an “open contest to promote debate”. His decision brings to an end a three-year term marked by scandal, rising living costs and record defence spending. “In this presidential election, it is necessary to show the people that the LDP is changing and the party is a new LDP,” Kishida, 67, said at a press conference at the prime minister’s office. “For this, transparent and open elections and free and vigorous debate are important. The most obvious first step to show that the LDP will change is for me to step aside.” Kishida’s decision will trigger a contest to replace him as party president, with the winner certain to be approved as prime minister by the LDP-controlled parliament. His successor will face growing international uncertainty, the election of a new US president and, at home, mounting concern over the cost of living crisis. Among those named as potential successors are Shigeru Ishiba, a centrist former defence secretary, and Taro Kono, the flamboyant digital minister. The race for the LDP presidency could also include female candidates, raising the possibility that Japan could have a woman as prime minister for the first time. The ultra-conservative economic security minister, Sanae Takaichi, and the former internal affairs minister, Seiko Noda, both stood against Kishida in the 2021 party leadership race and could decide to run again, although it is not clear if either will be able to secure the support of at least 20 lawmakers required to enter the race. The foreign minister, Yoko Kamikawa, has also been mentioned as a potential candidate. Media reports said Kishida had come under pressure from figures inside the LDP who believed he would be unable to lead the party to election victories. The party has struggled to deflect rising criticism over the funding scandal, while rising prices have seen support levels for his cabinet languishing at about 25% this year, sometimes dipping below 20%.