Uncertainty over the outlook for the global economy and slowing growth in emerging-market and resource-rich economies

「During the interim consolidated accounting period, Japan's economy remained on a gradual recovery track against the backdrop of improving employment and income conditions. However, uncertainty over the outlook continued due to heightened geopolitical risks, foreign-exchange volatility and soaring raw-material prices.」

「At the same time, the outlook remains uncertain due to factors weighing on the economy, including prolonged geopolitical risks, US tariff policy, continued inflation and volatility in the financial and capital markets.」

「During the fiscal year, the external environment surrounding the Group was marked by concerns about an economic slowdown due to the continued high interest-rate levels in various countries. The US economy, led by the US, maintained economic activity, while China continued to perform sluggishly.」

「During the cumulative third quarter of the fiscal year, the global economy remained on a gradual recovery track, but the pace slowed due to concerns about a slowdown resulting from monetary tightening in various countries and China's delayed economic recovery.」

「During the fiscal year, the external environment surrounding the Group was marked by growing concerns about an economic slowdown due to global inflation and monetary tightening. The US economy maintained growth as employment and income conditions remained resilient, but China's recovery after the lifting of its zero-COVID policy was slow, and related investment remained sluggish as the property market continued to languish. Supply concerns arising from Russia's invasion of Ukraine also persisted, leaving the overall economy in a state of uncertainty over the outlook.」

「During the cumulative third quarter of the fiscal year, approximately one year after Russia's invasion of Ukraine, the global economy remained on a recovery track overall. However, the recovery lost momentum due to disruption caused by concerns over the US financial system, persistently high inflation and growing uncertainty over the outlook for the Chinese economy.」

「During the cumulative second quarter of the fiscal year, the global economy remained at high levels against the backdrop of expectations for increased copper demand, as perceptions that US interest rates were nearing a peak strengthened and China's zero-COVID policy ended. Meanwhile, the yen strengthened sharply in the foreign-exchange market as expectations grew that the pace of US interest-rate hikes would slow and Japan widened the permissible trading range for long-term interest rates.」

「During the cumulative first quarter of the fiscal year, concerns about an economic slowdown intensified due to higher commodity prices following Russia's invasion of Ukraine, China's strict COVID-19 measures and monetary tightening by central banks in Europe and the US.」

「Just as the global economy was finally beginning to emerge from the COVID-19 pandemic, Russia invaded Ukraine, causing commodity prices, including energy and metals, to surge. This intensified inflationary pressure on top of an already strong inflation trend, prompting major developed countries to adopt policies focused on inflation rather than economic growth. In China, the continued zero-COVID policy also put the global economy on a path toward a slowdown.」

「During the cumulative third quarter of the fiscal year, the global economy initially began to recover independently as the effects of vaccinations reduced COVID-19 infections. However, the situation changed completely after Russia's invasion of Ukraine in the latter half of the second quarter. Inflation accelerated beyond initial expectations, and commodity prices were already surging due to the sharp rise in US interest rates and the stronger dollar, as well as supply-chain disruptions and stagnation in production and logistics. Prices of energy, grains and nonferrous metals rose further amid the cycle of sanctions between Europe and the US and Russia. In addition, concerns about a slowdown in the global economy intensified rapidly due to China's zero-COVID policy.」

「During the cumulative second quarter of the fiscal year, the recovery trend was maintained due to the effects of vaccinations and other factors, but the economy slowed somewhat amid the spread of new variants. In particular, supply-chain disruptions, stagnation in production and logistics, geopolitical risks, soaring energy and raw-material prices resulting from the transition to a greener economy, accelerating inflation and moves by the US toward monetary tightening increased uncertainty over the outlook.」

「During the cumulative first quarter of the fiscal year, although stagnation persisted in emerging economies and elsewhere, where vaccination rates were low, partly due to a resurgence of infections, developed major economies maintained their recovery trend due to the economic stimulus effects of various policies and vaccinations, and the global economy as a whole remained resilient.」

「In recent years, developed economies have begun to recover from the COVID-19 pandemic due to vaccination programs and the effects of economic policies, while difficult conditions continue in emerging economies and elsewhere because vaccination rates remain low and policy capacity is limited. In addition, amid changes in social structures caused by the pandemic, elevated market prices due to excess liquidity and disruptions to logistics networks, uncertainties have become more complex, including moves by developed countries to reduce quantitative easing and price increases resulting from efforts to curb raw-material production as economies pursue decarbonization and a greener economy.」

「During the cumulative third quarter of the fiscal year, expectations for recovery strengthened as the economic stimulus effects of monetary and fiscal policies in major countries and the effects of vaccinations reduced COVID-19 infections, although concerns began to emerge over rising US interest rates and tapering, or the reduction of quantitative easing.」

「During the cumulative second quarter of the fiscal year, recovery in the real economy during the quarter was delayed as COVID-19 infections continued and conditions fluctuated. However, economic measures centered on monetary and fiscal policies by major countries, together with the development of COVID-19 vaccines, resulted in a gradual recovery trend, although expectations were running ahead of the actual recovery.」

「During the cumulative first quarter of the fiscal year, although the global economy had moved past its worst point and signs of recovery were seen in China and some industries amid the continuing effects of the spread of COVID-19 from the previous fiscal year, difficult conditions generally continued.」

「However, after the start of the third quarter, the global spread of COVID-19 caused the global economy to slow sharply due to mass unemployment, lockdowns and disruptions to logistics, while financial and other markets fell sharply amid concerns about negative growth. At the same time, major countries around the world implemented monetary and fiscal measures and other economic recovery policies to avert an economic crisis, strengthening expectations for the outlook. Although a divergence emerged between the markets and the real economy, the economy began to recover gradually.」

「However, after the start of the third quarter, the global spread of COVID-19 increased the likelihood of negative growth due to restrictions on people's movement, including lockdowns, and supply-chain disruptions, causing financial and other markets to fall sharply.」

「During the cumulative second quarter of the fiscal year, expectations for the outlook strengthened as the US and China reached a partial agreement on their trade dispute and the risk of the UK leaving the EU without an agreement appeared likely to be avoided. However, as COVID-19 began to spread around the world in the latter half of the period, concerns emerged about adverse effects on the economy going forward.」

「During the cumulative first quarter of the fiscal year, signs of a slowdown initially intensified due to the effects of the escalation in US-China trade friction from the latter half of the previous fiscal year. Subsequently, as expectations for progress in US-China trade talks grew, expectations for the outlook increased, although economies other than the US remained sluggish.」

「During the cumulative third quarter of the fiscal year, the prolonged US-China trade friction and lack of progress in negotiations began to cast a shadow over the previously firm US economy. As the slowdown in the Chinese economy intensified further, growth across the global economy slowed. In addition, escalating tensions between the US and Iran heightened geopolitical risks in the Middle East, further intensifying uncertainty over the outlook.」

「During the cumulative second quarter of the fiscal year, uncertainty intensified due to the US-China trade issue and US interest-rate hikes in the latter half of the previous fiscal year, and market conditions deteriorated significantly. After the start of the current fiscal year, trade friction between the US and China intensified and protectionist measures grew stronger,」

「During the cumulative first quarter of the fiscal year, concerns about the economic outlook intensified due to stronger US-China trade friction caused by US protectionism since the previous fiscal year and the effects of US interest-rate hikes, resulting in instability centered on the financial markets.」

「However, from the latter half of the third quarter, US protectionism intensified, increasing global tensions over trade issues, particularly between the US and China. In addition, concerns about the outlook for the global economy, which had been showing strong growth, emerged as emerging-market economies became unstable following US interest-rate hikes.」

「During the cumulative third quarter of the fiscal year, developed economies, led by the US, performed favorably. Emerging economies, including China, also remained generally resilient, supported by developed economies. However, after the start of the third quarter, growing US protectionism increased concerns over US trade policy. In addition, rising global interest rates, led by the US, a stronger dollar, and increasing geopolitical risks, including heightened tensions in the Middle East and political turmoil in Italy, intensified uncertainty over the outlook.」

「During the cumulative second quarter of the fiscal year, the global economy performed favorably overall, led by the US and other developed economies. Emerging economies, including China, also remained resilient, supported by the developed economies, resulting in growth that exceeded expectations. In the financial markets, however, global interest rates began to rise in the latter half of the cumulative second quarter, led by the US, and concerns over trade friction led to a shift from rising to falling stock prices and to a weaker dollar, raising concerns about the outlook.」

「Against this favorable external backdrop, sales volume declined slightly due to furnace repair work at smelting companies. However, copper, the Group's principal product, remained at higher-than-expected levels despite periods of volatility caused by geopolitical risks, uncertainty over the Chinese economy and political instability in Europe and the US, so」

「During the cumulative third quarter of the fiscal year, the global economy remained resilient, led by the US economy, with both developed and emerging economies holding firm despite numerous uncertainties, including political and geopolitical risks and differences in the monetary policy stances of various countries, particularly US interest-rate hikes.」

「During the cumulative second quarter of the fiscal year, the global economy remained on a recovery track overall. The US economy remained firm, while the European economy also proved resilient despite political instability related to the UK's departure from the European Union (EU) and immigration issues. The Chinese economy achieved moderate growth despite challenges including property speculation and excessive debt, and Japan also showed signs of a recovery in personal consumption and housing investment.」

「The US economy remained firm. Europe and China were initially unstable, but gradually proved resilient despite low growth, leading to a slight improvement in expectations for the global economy as a whole.」

「During the fiscal year, the global economy performed more sluggishly than expected as signs of a slowdown intensified in emerging and commodity-exporting economies, including China, although the US economy remained firm.」

「During the cumulative third quarter of the fiscal year, the global economy continued to face uncertainty over its outlook, although heightened concerns over slowing growth in emerging and commodity-exporting economies due to the stronger dollar, lower commodity prices and falling stock prices receded on expectations of policy measures in various countries.」