Demand and Price Competition Risks from Recession and Declining Personal Consumption

「The outlook remains uncertain because of higher personnel costs resulting from worsening labor shortages, the weak yen and higher prices, persistently high energy and raw-material prices, the impact of U.S. tariff policies, a slowdown in the Chinese economy, and prolonged geopolitical risks related to Ukraine and the Middle East.」

「Although energy and raw-material prices continued to rise because of the Russia-Ukraine situation and related factors, consumer spending showed signs of recovery, including pent-up demand, and conditions emerged in which a gradual economic recovery was expected.」

「During the three months ended 30 June, Japan’s economy showed signs of recovery centered on consumer spending as social activity normalized. However, the Russia-Ukraine situation and related factors pushed energy and raw-material prices higher, slowing the economic recovery, and the outlook remained uncertain.」

「Although COVID-19 infections declined and economic activity was returning to normal, various destabilizing factors remained, including higher raw-material and energy prices caused by the prolonged Russia-Ukraine situation, higher global inflation, sharp exchange-rate fluctuations, rising personnel costs due to a declining working population, and financial-institution failures stemming from monetary policy. The need for close monitoring continues.」

「During the nine months ended 31 December, economic activity was on a gradual recovery path because vaccinations spread and government stimulus measures were implemented, but the spread of highly infectious variants caused infection risks to rise again, leaving conditions unstable.」

「However, the outlook remains uncertain because of downside risks such as higher prices resulting from the prolonged situation in Ukraine and the sharp depreciation of the yen.」

「During the three months ended 30 June, Japan’s economy showed signs of recovery centered on consumer spending as social activity normalized. However, the Russia-Ukraine situation and related factors pushed energy and raw-material prices higher, slowing the economic recovery, and the outlook remained uncertain.」

「During the nine months ended 31 December, economic activity was on a gradual recovery path because vaccinations spread and government stimulus measures were implemented, but the spread of highly infectious variants caused infection risks to rise again, leaving conditions unstable.」

「During the six months ended 30 September, Japan’s economy showed some signs of recovery in economic activity as vaccination measures progressed, but remained uncertain overall.」

「The group’s operating environment is expected to remain uncertain because measures to prevent the spread of COVID-19 continue to affect the real economy.」

「After the state of emergency was lifted, economic activity was gradually restored, and exports, imports and production, which had fallen sharply, showed signs of bottoming out. However, the rapid increase in new infections from December 2020 led to a second state of emergency being declared in January, and economic and social conditions and corporate earnings remained unpredictable.」

「After the state of emergency was lifted, economic activity was gradually restored, and exports, imports and production, which had fallen sharply, showed signs of bottoming out. Although some economic recovery was expected, the outlook remained uncertain because the timing of the end of COVID-19 could not be predicted.」

「During the three months ended 30 June, Japan’s economy remained in a difficult situation as the global spread of COVID-19 restricted economic activity, and the outlook remained uncertain even after the state of emergency was lifted.」

「From the third quarter onward, the economy entered a downturn because of the consumption-tax increase, Typhoon Hagibis and other natural disasters, and declining seasonal demand caused by the mild winter. From late February, the global spread of COVID-19 led Japan and other countries to impose increasingly stringent restrictions to prevent infection, bringing economic activity to a standstill. Tourism-related businesses, including accommodation and passenger transport, suffered devastating damage after inbound demand collapsed, followed by damage across a wide range of industries and regions, including manufacturing, sales and services. Income and employment conditions also deteriorated sharply, resulting in an unprecedentedly rapid and severe postwar economic downturn.」

「During the nine months ended 31 December, Japan’s economy remained on a gradual recovery path as corporate earnings and employment and income conditions improved under government economic policies, despite some stagnation in production and exports. However, the outlook became uncertain because of rising uncertainty in overseas economies, including trade issues such as U.S.-China trade friction, slower Chinese growth and Brexit, as well as weaker domestic consumer sentiment following the consumption-tax increase.」

「During the six months ended 30 September, the operating environment generally deteriorated. Manufacturing was affected by sluggish automobile sales and semiconductor-related businesses following the U.S.-China trade war, while domestic-demand retail, services and other nonmanufacturing businesses also weakened because inbound demand declined amid deteriorating Japan-Korea relations and costs rose with higher raw-material and personnel expenses. At the same time, front-loaded demand arose for some high-priced durable goods, including home appliances, ahead of the consumption-tax increase.」

「Overseas, the outlook remains uncertain because of prolonged instability in the international environment, including protracted U.S.-China trade friction and concerns about a slowdown in the Chinese economy.」

「During the nine months ended 31 December, Japan’s economy continued to expand gradually with the global recovery, but trade friction with the protectionist United States became more pronounced. China’s economic slowdown became significant from the autumn, and some domestic exporters had already begun to show signs of weakness.」

「During the six months ended 30 September, Japan’s economy continued to expand gradually with the global recovery, but extreme heat and natural disasters weighed on some industries, producing divergent results. Trade friction between the protectionist United States and China also led some companies to begin considering revisions to production plans.」

「During the three months ended 30 June, although Japan was said to be approaching its longest postwar economic expansion, corporate sentiment was adversely affected by heightened concerns over global trade friction surrounding the protectionist United States. Consumer spending was generally weak as consumers remained strongly cost-conscious because of poor weather in May, higher gasoline prices and the June northern Osaka earthquake, except in some retail businesses benefiting from inbound visitors.」

「During the fiscal year, Japan’s economy was supported by a gradual recovery in the global economy, including emerging economies, inbound demand from foreign tourists and a wealth effect arising from strong equity markets, despite heightened tensions and uncertainty in overseas social conditions, including North Korea,」

「The business operated in an uncertain environment while facing downside risks, including rising political and economic uncertainty overseas.」

「Consumers remain strongly cost-conscious because of concerns about the future, including sluggish wage growth and higher social-insurance burdens. The operating environment for domestic-demand companies that cannot benefit from inbound demand has not improved materially.」

「However, the outlook for overseas economies remains uncertain because of concerns about political developments in Europe and the United States.」

「The outlook remains uncertain because of slower overseas economic growth, particularly in emerging economies, financial-market volatility and the transition of the U.S. administration.」

「Although the group’s Kumamoto plant avoided damage, production stoppages and cuts at major automobile and motorcycle manufacturers caused by the Kumamoto earthquake in April, together with production stoppages at manufacturers related to the mini-vehicle fuel-economy data falsification issue, had a significant impact.」

「We were significantly affected by production stoppages at manufacturers related to the issue of falsified fuel-economy data for mini-vehicles.」

「If an economic downturn reduces consumer spending, demand for the products and services provided by the group may decline and price competition may intensify. In such an environment, the group may be unable to maintain sales and profitability.」