July 1 (Bloomberg) -- Prime Minister Taro Aso appointed Yoshimasa Hayashi as Japan’s economy minister, reshuffling the Cabinet less than four months before nation elections that polls indicate he will lose.

Hayashi, 48, replaces 70-year-old Kaoru Yosano, who will retain his post as finance minister, Chief Cabinet Secretary Takeo Kawamura said today in Tokyo. Motoo Hayashi, 62 and no relation to Yoshimasa, was named head of the public safety commission.

Aso’s approval rating has collapsed in the midst of rising unemployment, corporate pessimism and government scandals. Some members of the ruling Liberal Democratic Party are calling on Aso to step aside ahead of parliamentary elections, which he must call by Sept. 10. Others in the party are debating whether he should go before the voters sooner or later.

“Aso is desperate to fight against those who want him down,” said Minoru Morita, an independent political analyst based in Tokyo. “Nobody can change the trend of the LDP headed toward defeat.”

Polls show the LDP, which has governed for all but 10 months since 1955, is likely to lose to the opposition Democratic Party of Japan in the Lower House elections. The DPJ already controls the less-powerful Upper House.

The LDP is targeting a simple lower-house majority with its coalition partner New Komeito, a large drop from the 2005 election when it won two-thirds of the seats. Aso’s party currently has 303 lawmakers in the 480-seat lower chamber, compared with 112 for the DPJ.

Kennedy School

Hayashi, the son of a former finance minister, is a graduate of the University of Tokyo, and studied at Harvard University’s John F. Kennedy School of Government. A third-term LDP upper house legislator, he was defense chief for two months under Aso’s predecessor, Yasuo Fukuda.

Yosano took on the additional post of finance minister after predecessor Shoichi Nakagawa resigned in February for appearing to be drunk at a Group of Seven meeting in Italy. Yosano also holds the financial services portfolio in the cabinet.

Kawamura earlier downplayed reports that Aso may also be considering changes to the LDP’s executive leadership.

“There are various opinions among party leaders,” Kawamura said. “I don’t think the prime minister has said clearly whether or not he’ll do anything.”

The Yomiuri newspaper reported today that Aso may call a general election on Aug. 8, citing unidentified advisers, by dissolving the lower house after the Tokyo metropolitan assembly election on July 12.

To contact the reporters on this story: Sachiko Sakamaki in Tokyo at Ssakamaki1@bloomberg.net; Takashi Hirokawa in Tokyo at thirokawa@bloomberg.net.

Last Updated: July 1, 2009 05:16 EDT