Geopolitical, foreign exchange, procurement and credit risks associated with overseas EPC

「The global economy maintained solid growth during the consolidated fiscal year, supported in part by improving financial conditions and strong AI-related investment. Going forward, however, close attention will be required to downside risks to national economies arising from higher energy prices caused by rising geopolitical risks, including the situation in the Middle East, supply-chain disruptions, and increasing uncertainty, as well as disruption risks if supply constraints such as shortages of electricity and semiconductors essential for AI development and utilization become more severe.」

「The global economy as a whole maintained solid growth during the consolidated fiscal year under review, supported by a recovery in real income resulting from a modest easing of inflation. However, downside risks remain, including an expansion of trade conflicts caused by the protectionist policies of the U.S. Trump administration, an associated slowdown in China's economy, and concerns about the creditworthiness of U.S. and European government bonds.」

「During the interim consolidated accounting period, the global economy as a whole maintained resilience as higher wages improved household purchasing power and the recovery in global trade volumes revitalized economies with high export dependence. Going forward, despite uncertainty from economic and market fluctuations caused by monetary policies in various countries, the U.S. presidential election and heightened geopolitical risks, the economy is expected to return to a steady growth trajectory, supported by monetary easing after inflation is brought under control and the economy slows through monetary tightening.」

「Based on the foregoing, the global economy is expected to return to a steady growth trajectory, despite uncertainty from the cumulative effects of interest rate hikes, the withdrawal of policy support, China's property market problems, and heightened geopolitical risks.」

「Based on the foregoing, the global economy is expected to remain in a slowdown phase due to continued monetary tightening in the United States and Europe, concerns about China's outlook, and concerns about increasing instability in the situation in the Middle East.」

「During the first quarter of the current consolidated cumulative period, the global economy began to normalize as the impact of COVID-19 became limited. However, global inflation stemming from the prolonged Russia-Ukraine situation triggered substantial monetary tightening, particularly in Europe and the United States, slowing the pace of the economic recovery.」

「Meanwhile, the global supply chain, which had been severely disrupted by these multiple factors, gradually began to normalize. The lifting of China's zero-COVID policy and improved energy supply-demand conditions also led to signs of an economic recovery in the second half of the fiscal year. Close attention remains necessary, however, to downside risks to economic security from prolonged monetary tightening in Europe and the United States aimed at curbing inflation, a slowdown in China's growth associated with the property downturn, the Russia-Ukraine situation, and U.S.-China confrontation over Taiwan.」

「During the third quarter of the current consolidated cumulative period, risks originating from infectious diseases were generally expected to decline, but the pace of the economic recovery slowed due to accelerating and persistently high inflation driven by multiple factors and continued rapid monetary tightening by central banks. Inflation in each country and the monetary policies responding to it, the situation in Ukraine, and economic security continue to be risk factors.」

「The Group's business environment is generally heading toward a slowdown as inflation driven by multiple factors accelerates and central banks in various countries intensify monetary tightening in response. However, a recession in the United States is expected to be limited against the backdrop of a strong labor market, while Europe is diverging in the opposite direction and is entering a recession due to reduced energy supplies. Going forward, inflation trends in each country and the monetary policies responding to them, as well as the Ukraine conflict and China's national security risks, will be risk factors for the economy and foreign exchange in the second half.」

「However, as the Russia-Ukraine situation becomes protracted and global monetary tightening advances, close attention must continue to be paid to downside risks from fluctuations in financial and capital markets, rising raw material prices and supply constraints. In addition, stagnation in China's consumption and production caused by economically costly COVID-19 control measures, as well as worsening U.S.-China relations over Taiwan, will be downside factors for the global economy.」

「During the third quarter of the current consolidated cumulative period, infections with the Omicron variant increased sharply worldwide, including in Japan, and the outlook remains uncertain. However, the variant is less severe, partly due to the effects of vaccination, and the expansion of additional vaccinations is expected to bring the outbreak under control. Economic recovery has begun to emerge, particularly in developed economies. Meanwhile, close monitoring remains necessary for downside risks from manufacturing supply chain disruptions caused by the spread of infections and inflation caused by soaring resource prices resulting from the green transition.」

「During the second quarter of the current consolidated cumulative period, consumption in Japan remained weak due to COVID-19, but the economy is expected to recover as vaccinations are promoted and capital investment recovers. The global economy has also generally begun to recover from the impact of COVID-19, but it remains necessary to closely monitor the impact of infection trends and fluctuations in financial and capital markets.」

「During the first quarter of the current consolidated cumulative period, consumption in Japan remained weak against the backdrop of repeated declarations of a state of emergency, but the economy is expected to recover from the second half onward as vaccinations progress and capital investment recovers. In the global economy, infections with variants are increasing, particularly in Asia, but consumption is recovering in the United States, Europe and China as vaccinations progress and restrictions on activities are eased, and the economic recovery is expected to strengthen going forward.」

「The global economy remains in a difficult situation due to the worldwide spread of COVID-19. Although signs of a recovery are evident, it is necessary to closely monitor the impact of fluctuations in financial and capital markets.」

「During the second quarter of the current consolidated cumulative period, corporate earnings in Japan continued to decline substantially due to COVID-19, and the economy remained in a difficult situation, including weakness in capital investment, although signs of a recovery were seen in personal consumption, exports and production. The global economy also remained difficult due to the worldwide spread of COVID-19, requiring close monitoring of the impact of fluctuations in financial and capital markets.」

「During the first quarter of the current consolidated cumulative period, corporate earnings in Japan declined sharply due to the declaration of a state of emergency and requests to refrain from going out amid the COVID-19 pandemic. The economy is in a difficult situation, including weakness in capital investment. The global economy has also deteriorated rapidly, requiring close monitoring of the impact of fluctuations in financial and capital markets.」

「The Japanese economy during the consolidated fiscal year under review had been recovering moderately, but deteriorated rapidly from March 2020 due to the spread of COVID-19. With no end to the pandemic in sight, the outlook is uncertain and extremely difficult conditions are expected to continue.」

「Although the global economy is generally recovering moderately, it is necessary to monitor tensions over trade issues between the United States and China, China's economic outlook, the UK's EU withdrawal, developments in the situation surrounding the Middle East, and the impact of fluctuations in financial and capital markets. The outlook for both the Japanese and global economies therefore remains uncertain.」

「Although the global economy is generally recovering moderately, it is necessary to monitor the impact of tensions over trade issues between the United States and China, China's economic outlook, the UK's EU withdrawal, fluctuations in financial and capital markets, and geopolitical risks. The outlook for both the Japanese and global economies therefore remains uncertain.」

「Although the global economy is generally recovering moderately, it is necessary to monitor trade policy trends, China's economic outlook, policy uncertainty, fluctuations in financial and capital markets, and geopolitical risks. The outlook for both the Japanese and global economies therefore remains uncertain.」

「Although the global economy is generally recovering moderately, concerns remain strong regarding the impact of trade policy trends on the global economy, China's economic outlook, the impact of policy uncertainty, financial and capital markets, and crude oil price trends. The outlook for both the Japanese and global economies therefore remains uncertain.」

「Although the global economy is showing some weakness, it is generally recovering moderately. However, concerns remain strong regarding the impact of trade policy trends on the global economy, China's economic outlook, the impact of policy uncertainty, financial and capital markets, and crude oil price trends. The outlook for both the Japanese and global economies therefore remains uncertain.」

「The global economy is also continuing a moderate recovery, but concerns remain strong regarding the impact of trade policy trends on the global economy; geopolitical risks related to the situation in the Middle East; the economic outlook for China, Europe and emerging Asian economies; foreign exchange movements; and crude oil price trends. The outlook for both the Japanese and global economies therefore remains uncertain.」

「The global economy is also continuing a moderate recovery, but concerns remain strong regarding geopolitical risks such as the situation in the Middle East; the economic outlook and policy uncertainty in China and other emerging Asian economies; the protectionist economic and monetary policies of the United States; trade policy trends; foreign exchange movements; and crude oil price trends. The outlook for both the Japanese and global economies therefore remains uncertain.」

「The global economy is also continuing a moderate recovery, but concerns remain strong regarding heightened geopolitical risks, including the situation on the Korean Peninsula; the economic outlook and policy uncertainty in China and other emerging Asian economies; the protectionist economic policies and monetary policy trends under the new U.S. administration; foreign exchange movements; and crude oil price trends. The outlook for both the Japanese and global economies therefore remains uncertain.」

「The global economy is also continuing a moderate recovery, but concerns remain strong regarding heightened geopolitical risks, including the situation on the Korean Peninsula, the protectionist economic policies and monetary policy trends under the new U.S. administration, foreign exchange movements, weak crude oil prices and the UK's EU withdrawal issue. The outlook for both the Japanese and global economies therefore remains uncertain.」

「The global economy is also continuing a moderate recovery despite weakness, but the outlook for both the Japanese and global economies remains uncertain due to heightened geopolitical risks, including the situation on the Korean Peninsula, the protectionist economic policies and monetary policy trends under the new U.S. administration, foreign exchange movements, weak crude oil prices, the UK's EU withdrawal issue and other factors.」

「The global economy is also continuing a moderate recovery despite weakness, but the outlook for both the Japanese and global economies remains uncertain due to heightened geopolitical risks, including the situation on the Korean Peninsula, the protectionist economic policies and monetary policy trends under the new U.S. administration, foreign exchange movements, weak crude oil prices, the UK's EU withdrawal issue and other factors.」

「The global economy is also continuing a moderate recovery despite weakness, but the outlook for both the Japanese and global economies remains uncertain due to the impact of the protectionist economic policies and monetary policy trends under the new U.S. administration, foreign exchange movements, weak crude oil prices, the UK's EU withdrawal issue and other factors.」

「Meanwhile, although the global economy continues to face uncertainty due to China's economic slowdown, weak crude oil prices, geopolitical risks and terrorism in Europe, the Middle East and elsewhere, and the UK's EU withdrawal issue, the economy has generally continued to recover moderately, with the United States recovering and the euro area and emerging economies moving past their worst phase.」

「In response to these risks, the Group considers possible measures by closely gathering information in advance and working to understand developments. It also seeks to mitigate risks through measures including trade credit insurance, foreign exchange hedging, setting contractual terms with customers, such as diversifying contract structures, specifying contract currencies, payment terms and risk-sharing provisions, and diversifying suppliers of equipment and materials and contractors for construction work.」