Concern over destabilization overseas and further yen appreciation

「The global economy continued to face geopolitical and political uncertainty during the consolidated fiscal year. In the US, the return of former President Trump is driving a realignment of trade and security policies, while tensions surrounding Palestine in the Middle East appear likely to persist, increasing the risk of fluctuations in international resource prices and logistics costs.」

「Depending on how the new US administration conducts its policies, it could also affect domestic price trends through the financial and foreign exchange markets.」

「During the consolidated fiscal year, the Japanese economy experienced continuing inflation from the previous fiscal year, as Russia's prolonged invasion of Ukraine was joined by the outbreak of conflict between Israel and Hamas and Hezbollah. Yen depreciation also progressed amid the Japan-US interest rate differential created by the robust US economy, while raw material prices and domestic freight costs rose as working conditions improved.」

「Although the construction industry is increasingly able to pass higher construction material costs on to contract prices, construction profitability has not fully recovered because of labor shortages, longer construction periods and other factors.」

「Persistently high energy prices and yen depreciation against the backdrop of Russia's invasion of Ukraine, the Israel-Palestine conflict and US-China tensions, together with new supply chain disruptions, are expected to pose risks to economic activity.」

「In the construction industry during the nine-month period ended [second quarter], the increase in construction material prices resulting from Russia's invasion of Ukraine and yen depreciation caused by the Japan-US interest rate differential could not necessarily be passed on to contract prices, and construction profitability has not recovered.」

「Amid growing uncertainty about the economic outlook because of heightened tensions surrounding Ukraine and rising risks related to yen depreciation and inflation,」

「China's extensive and prolonged COVID-19 lockdowns had a major impact on global economic supply chains, while Russia's invasion of Ukraine, which began in February 2022, drove up resource prices and intensified inflation worldwide. In addition, the yen weakened further against the US dollar from April 2022 and had fallen to the ¥144 range by the end of September, driving up import prices and production costs.」

「No new business or other risks arose during the cumulative third quarter of the current consolidated fiscal year. There were also no material changes to the business or other risks described in the annual securities report for the previous consolidated fiscal year.」

「In the construction industry during the nine-month period ended [second quarter], prices of major construction materials rose substantially because resource prices increased as the situation in Ukraine became more tense and the yen weakened further owing to the Japan-US interest rate differential. Costs also increased and profitability declined as construction schedules were affected by delays in the delivery of equipment caused by global supply chain disruptions.」

「Although there are concerns over a slowdown in the Chinese economy, exports supported by a full recovery in overseas economies from the COVID-19 pandemic and a recovery in capital investment are expected to support the Japanese economy going forward.」

「There were no newly arising business or other risks during the nine-month period ended [third quarter]. In addition, there were no significant changes to the business and other risks described in the annual securities report for the previous consolidated fiscal year.」

「No new business or other risks arose during the three months ended 30 June. There were also no material changes to the business and other risks described in the securities report for the previous fiscal year.」

「Uncertainty is expected to persist, with concerns including the impact on the Japanese economy of the next US administration's economic and foreign policies and the renewed spread of COVID-19 in the US and Europe.」

「From the fourth quarter onward, we expect uncertainty to persist, because the value of orders for building construction in the April-June construction orders survey conducted by the Ministry of Land, Infrastructure, Transport and Tourism fell 19.1% year on year, marking another substantial decline following the January-March quarter, and because the decline in construction investment, including renovation work, is expected to become evident as a result of the COVID-19 pandemic.」

「No new business or other risks arose during the three months ended 30 June. There were also no material changes to the business and other risks described in the securities report for the previous fiscal year.」

「Japan's economy is expected to remain uncertain, with attention required regarding the risk that prolonged US-China trade friction and uncertain overseas political and policy factors could cause overseas economies to slow further, as well as the impact of a consumption tax increase on personal consumption.」

「No new business or other risks arose during the cumulative third quarter of the current consolidated fiscal year. There were also no material changes to the business or other risks described in the annual securities report for the previous consolidated fiscal year.」

「There were no newly emerging business or other risks during the cumulative second-quarter period. In addition, there were no material changes in the business or other risks described in the annual securities report for the previous consolidated fiscal year.」

「No new business or other risks arose during the three months ended 30 June. There were also no material changes to the business and other risks described in the securities report for the previous fiscal year.」

「No new business or other risks arose during the cumulative third quarter of the current consolidated fiscal year. There were also no material changes to the business or other risks described in the annual securities report for the previous consolidated fiscal year.」

「There were no newly emerging business or other risks during the cumulative second-quarter period. In addition, there were no material changes in the business or other risks described in the annual securities report for the previous consolidated fiscal year.」

「No new business or other risks arose during the cumulative first quarter of the current consolidated fiscal year. There were also no material changes to the risks described in the previous fiscal year.」

「There are concerns that pressure from the US administration's foreign policy to disrupt the existing trade structure and the emergence of geopolitical risks in East Asia could affect the domestic economy.」

「Meanwhile, uncertainty about the outlook for the domestic and overseas economies intensified because of the stalled operation of the new US administration, moves toward the UK's withdrawal from the EU, and instability in East Asia.」

「In addition, the outlook for economic conditions became more uncertain because of the impact on the economy of gridlock in the US administration and rising geopolitical risks in East Asia.」

「The foreign exchange market became unstable, partly owing to the emergence of the new US administration, while uncertainty increased because of slower economic growth in China and emerging markets. As a result, uncertainty about the outlook for the global economy intensified.」

「Meanwhile, there are concerns that overseas factors, including policy changes by the new US administration, instability in the Middle East, and weaker growth in China and emerging markets, could affect the domestic economy.」

「There were many sources of uncertainty in overseas conditions, including an economic downturn in resource-exporting countries, the UK's withdrawal from the EU, frequent terrorist attacks and concerns over further yen appreciation, increasing uncertainty about the outlook.」