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New Zealand is facing a leadership contest following the surprise resignation of Prime Minister John Key that will pit his deputy, a former party leader, against at least two other prominent members.

Mr. Key, a 55-year-old former Merrill Lynch banker, said on Monday that he will step down to spend more time with his family and to give his ruling center-right National Party time to rally around a new leader before elections next year. The party will meet Dec. 12 to decide on a new leader.

On Tuesday, Deputy Prime Minister Bill English, who was endorsed by Mr. Key, said he would seek the top job at that meeting.

"I know the talent, energy and focus of the National Party team and would welcome the opportunity to lead it," Mr. English, who is also the country's finance minister, said on his Facebook account.

Mr. English led the party in opposition from 2001 until 2003, when he was replaced amid weak opinion polls, and has been its deputy since 2008.

He will face challenges from Health Minister Jonathan Coleman, a medical doctor first elected in 2005, and Corrections and Police Minister Judith Collins, a lawyer elected in 2002.

"I am absolutely up for the challenge," Dr. Coleman, 50, told reporters. "I believe I've got the energy, I've got relative youth on my side and I am absolutely focused on winning this leadership contest but then going on and delivering the very, very best for New Zealanders."

Heading into an election year, Ms. Collins, 57, said the party needs "the best person at the helm and I believe that I am that person."

The successful candidate will take over an economy that is among the fastest-growing in the developed world.

Mr. Key, who has led the country since 2008, had said he would back 54-year-old Mr. English to replace him. "We have had a great working relationship and to me it would feel a bit odd if I wasn't backing the guy that I have stood alongside for a decade," he said on Monday.

As with neighboring Australia, New Zealand faces the challenge of balancing its close U.S. ties with a growing economic relationship with China—an important trade partner.

Mr. Key was among the Pacific Rim leaders pushing back against growing skepticism toward free-trade deals in the U.S. and elsewhere at the Asia-Pacific Economic Cooperation forum in Lima, Peru, in November.

Support for the National Party rose to 49.5% in November, well ahead of a potential alliance between the country's Labour and Greens parties on a combined 37.5%, according to a poll by Roy Morgan Research, a market-research company.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

December 06, 2016 02:35 ET (07:35 GMT)

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