"Japan has probably already started falling into an economic lull in the second half of the year, " said Yoshimasa Maruyama from Itochu Economic Research institute in Tokyo.

BBC: A worker in a Japanese factory

Three other candidates contested the leadership - Nobuteru Ishihara, son of Tokyo Governor Shintaro Ishihara, Nobutaka Machimura, the former foreign minister, and Yoshimasa Hayashi, another former defence minister.

BBC: Japan ex-PM Shinzo Abe elected opposition leader

The LDP, which gave more detail on the need for higher consumption taxes in its manifesto, found the idea gained little momentum, said Yoshimasa Hayashi, a politician in the party who campaigned with upper-house candidates in rural areas.

ECONOMIST: Japan's upper-house elections