Uncertainty over the outlook due to tax increases, overseas economies, and financial and capital market volatility

「During the current interim consolidated accounting period, the Japanese economy followed a moderate recovery path centered on domestic demand. Although uncertainty surrounding US trade policy and interest-rate trends persisted, capital investment appetite remained firm against a backdrop of improving corporate earnings. Meanwhile, uncertainty caused by overseas factors, including prolonged geopolitical risks and foreign exchange volatility, remains high, and the global economy must continue to be monitored closely.」

「当第１四半期連結累計期間におけるわが国経済は、米国の通商政策や金利動向を巡る不透明感が継続したものの、企業収益の改善を背景とした設備投資意欲は底堅く、内需を中心とした緩やかな回復基調で推移いたしました。一方で、地政学的リスクの長期化や為替相場の変動など、海外要因による不確実性は依然として高く、引き続き世界経済の動向を注視する必要がある状況にあります。」

「However, uncertainty caused by overseas factors, including the prolonged geopolitical risks and foreign exchange volatility, remains high, and the global economy must continue to be monitored closely.」

「However, Japan’s economy is structurally highly susceptible to overseas factors, including US trade policy and interest-rate trends, economic stimulus measures in China, and foreign exchange volatility. Depending on future developments in the global economy, a pause in the economic recovery cannot be ruled out.」

「During the current interim consolidated accounting period, the Japanese economy entered a clearer recovery phase. A strong appetite for investment was maintained against a backdrop of improving corporate performance, including the recovery in automobile production, while personal consumption was also expected to recover, supported by the effects of various policies such as the fixed-amount tax cut. As a result, preliminary GDP for the April-June quarter showed positive growth for the first time in 2 quarters. Inflation also eased in the global economy, which showed resilient growth.」

「During the cumulative first quarter of the current consolidated fiscal year, the Japanese economy remained weak, affected by soaring prices and substantial production cuts in the automobile industry, but is expected to recover gradually, supported by the effects of various policies. Meanwhile, uncertainty over the outlook remains due to a renewed increase in prices, particularly in Europe and the United States, heightened tensions in the Middle East, and a slowdown in the Chinese economy. The global situation must therefore continue to be monitored closely.」

「Although prolonged monetary tightening based on concerns over inflation and geopolitical risks remained, it was also a year in which signs of improvement began to emerge.」

「During the cumulative third quarter of the current consolidated fiscal year, personal consumption in Japan was negative for the 2nd consecutive quarter, partly because wage increases had not kept pace with rising prices, which weighed on consumption. Corporate capital investment was also lackluster, including due to a decline in spending on semiconductor manufacturing equipment, leaving both personal consumption and capital investment, the pillars of domestic demand, lacking momentum. As a result, real GDP growth in the July-September 2023 quarter was an annualized quarter-on-quarter decline of 2.1%, representing negative growth for the first time in 3 quarters. Turning to the global economy, strong personal consumption drove growth in the United States, where real GDP growth in the July-September 2023 quarter was an annualized quarter-on-quarter 4.9%, the highest growth rate since the fourth quarter of 2021. In China, real GDP growth for January-September was 5.2% year on year, representing progress toward achieving the government’s 2023 economic growth target of around 5%. Thus, the quarter was marked by a clear divergence between domestic and overseas economic conditions.」

「Turning to the global economy, the US economy remains firm despite monetary tightening, supported by favorable employment conditions. However, the risk of a recession caused by the effects of monetary tightening becoming more apparent remains. In China, the recovery in domestic demand following the lifting of the zero-COVID policy is slower than expected. Globally, the economy is on a moderate slowing trend due to risks such as rising prices and interest rates. Uncertainty over the outlook therefore remains, and the global situation must continue to be monitored closely.」

「Turning to the global economy, real GDP growth in the United States in the January-March 2023 quarter was positive for the 3rd consecutive quarter, although it slowed from the October-December 2022 quarter, and the risk of an economic downturn due to financial instability remains. In China, the economy is gradually recovering following the lifting of the zero-COVID policy. Globally, however, economic growth is slowing moderately due to risks such as rising prices and interest rates. Uncertainty over the outlook therefore remains, and the global situation must continue to be monitored closely.」

「Concerns over inflation and geopolitical risks also persist, and uncertainty over the outlook remains. The global situation must therefore continue to be monitored closely.」

「Turning to overseas economies, concerns are growing over a slowdown in the global economy. In the United States, uncertainty over the outlook is becoming more severe due to slower personal consumption caused by rising unemployment and persistently high prices, as well as the continuation of a high-interest-rate policy. The effects of volatility in financial and capital markets and other factors must therefore continue to be monitored closely.」

「Turning to the global economy, exports are expected to grow only moderately due to constraints on resource supplies arising from the prolonged situation in Ukraine, an economic slowdown caused by surging energy prices, and the continuation of lockdowns in some Chinese cities.」

「Turning to the global economy, the deterioration and prolongation of the situation in Ukraine are factors that could weigh on the global economy through constraints on resource supplies and surging energy prices. In addition, against a backdrop of global inflation, countries have shifted toward tighter monetary policy, creating a risk that rising interest rates will slow the pace of the global economic recovery. China’s zero-COVID policy also continues to pose the risk of an economic downturn, as it has caused logistics disruptions through supply chains and intensified production constraints and shortages of goods. The effects of volatility in financial and capital markets and other factors must therefore continue to be monitored closely.」

「There is a risk that the number of new infections will surge due to the emergence of the Omicron variant, causing an economic downturn. Other risks include excessive corrections in asset prices accompanying rising long-term US interest rates, a slowdown in the Chinese economy caused by an increase in non-performing loans, and the impact on the global economy of Russia’s invasion of Ukraine.」

「During the cumulative third quarter of the current consolidated fiscal year, the Japanese economy remained weak, although the severe conditions caused by COVID-19 were gradually easing.」

「Although the economy is expected to recover, supported by the effects of various policies and improvements in overseas economies, the end of the spread of COVID-19, including variants, is still not in sight. There is a risk of an economic downturn depending on the impact of renewed domestic and overseas infections on economic expansion, and the effects of volatility in financial and capital markets and other factors must continue to be closely monitored.」

「Although the economy is expected to recover, supported by the effects of various policies and improvements in overseas economies, there is a risk of an economic downturn depending on the impact of renewed domestic and overseas infections on economic expansion. The effects of volatility in financial and capital markets and other factors must continue to be closely monitored.」

「Although the economy is expected to recover, supported by the effects of various policies and improvements in overseas economies, there is a risk of an economic downturn depending on the impact of renewed domestic and overseas infections on economic expansion. The effects of volatility in financial and capital markets and other factors must therefore be closely monitored.」

「However, close attention must be paid to the risk of a further deterioration in overseas economies and the impact of infectious diseases through supply chains.」

「During the cumulative second quarter of the current consolidated fiscal year, the Japanese economy remained on a gradual recovery path, supported by steady improvements in corporate earnings, capital investment, and employment conditions. However, the outlook remained uncertain due to concerns over the growing sense of labor shortages, the effects of tax increases, uncertainty in overseas economies, and the effects of volatility in financial and capital markets.」