Risk of economic downside from geopolitical risks and political uncertainty

「The global economy remained uncertain during the consolidated fiscal year under review, against a backdrop of U.S. tariff policies and developments in trade friction, prolonged geopolitical risks and the emergence of new conflicts, fluctuations in resource and energy prices, and supply chain disruptions.」

「During the current interim consolidated period, uncertainty about the outlook spread rapidly following the US administration's announcement of reciprocal tariff policies. In addition to the impact of the US administration's tariff policies on economies worldwide, concerns about the global economic outlook intensified further because of the prolonged conflict in Ukraine and heightened geopolitical risks resulting from the rapidly escalating situation in the Middle East.」

「During the current interim consolidated period, inflation eased as the effects of monetary tightening in Europe, the United States and elsewhere took hold, although conditions varied by region, and the US economy followed a gradual recovery path as consumption remained resilient. However, geopolitical risks increased, including the prolonged conflict in Ukraine and the tense situation in the Middle East.」

「Meanwhile, uncertainty about the outlook has continued because of heightened geopolitical risks, higher raw-material and energy prices, and concerns about the outlook for the Chinese economy.」

「Meanwhile, uncertainty about the outlook has continued because of heightened geopolitical risks and higher raw-material and energy prices.」

「Meanwhile, uncertainty about the outlook has continued because of the prolonged Russia-Ukraine situation and higher raw-material and energy prices.」

「Cost-push inflation has spread worldwide because of the situation in Ukraine and other factors, and concern has arisen that the global economy could enter a recession as the United States and other major countries raise policy interest rates in response.」

「However, cost-push inflation has spread worldwide because of the situation in Ukraine, and concern has emerged that the global economy could enter a recession as the United States and other countries raise policy interest rates in response.」

「While shortages and higher prices for raw materials such as electronic components that began the previous year continue to have a significant negative impact on production, uncertainty about the outlook has increased further as the situation in Ukraine is expected to continue for an extended period.」

「Shortages and higher prices for raw materials such as electronic components have had a significant negative impact on production. In addition, logistics delays and soaring energy prices, followed by Russia's invasion of Ukraine, increased the concerns affecting the global economy.」

「New concerns, including renewed spread of infections, regional disparities and soaring energy prices, have emerged, further increasing uncertainty about the economic outlook.」

「During the current consolidated fiscal year, the global economy fell sharply at the beginning of the period because of the impact of COVID-19 and gradually began to recover as countermeasures progressed, but was forced to stagnate as waves of infection repeatedly recurred.」

「While China and other countries that contained the spread at an early stage saw a rapid recovery, the recovery was slower in the Americas because of delays in implementing countermeasures. In regions such as Europe where infections spread again, lockdowns began, creating concern about the outlook.」

「During the first quarter of the current consolidated cumulative period, the global spread of COVID-19, which had continued since the fourth quarter of the previous consolidated fiscal year, constrained economic activity worldwide and forced the economy into negative growth.」

「During the current consolidated fiscal year, the global economy continued to slow amid uncertainty over US-China trade friction and Brexit, but from the fourth quarter onward, the global spread of COVID-19 constrained economic activity and rapidly worsened economic conditions.」

「During the third quarter of the current consolidated cumulative period, the global economy continued to slow amid uncertainty over the outlook for US-China trade friction and Brexit. In Japan, weak demand from China and higher crude oil prices negatively affected related industries, while the change in the consumption tax rate also cast a shadow over growth. In the United States, corporate activity slowed, particularly in manufacturing, while employment and labor conditions remained favorable. In Europe, manufacturing remained weak as export growth slowed, but domestic demand, including personal consumption, continued to expand, supported by increases in employment, accelerating wage growth and monetary easing. In Asia, China's slowdown became pronounced and its effects spread across the region.」

「During the second quarter of the current consolidated cumulative period, the global economy continued to slow as growth in global trade decelerated due to US-China trade friction. In Japan, weak demand from China and higher crude oil prices negatively affected related industries, causing signs of weakening growth. In the United States, growth continued despite deteriorating manufacturing sentiment, as personal consumption remained resilient. In Europe, domestic demand supported by personal consumption remained firm, but exports remained weak, partly because of Brexit. In Asia, China's slowdown became pronounced and its effects spread across the region.」

「During the first quarter of the current consolidated cumulative period, the global economy continued to slow as a result of US-China trade friction and declining external demand. In Japan, employment conditions continued to improve, but consumer sentiment showed signs of weakening as real wage growth remained sluggish. Although concern about the significant impact of US-China trade friction on the United States remained high, the economy generally remained firm. In Europe, growth slowed amid the erratic progress of Brexit and the impact of US-China trade friction, despite domestic demand remaining solid. In Asia, China's slowdown became pronounced.」

「During the current consolidated fiscal year, the domestic economy continued its gradual recovery as employment conditions improved and capital investment remained solid, but stagnated from the beginning of the year through the fiscal year-end as external demand declined and cost burdens increased. Regarding the export environment, although concern remained high about the impact of US-China trade friction on the United States, the economy remained strong, supported by improving employment conditions and solid corporate earnings. In Europe, growth slowed as exports declined, despite domestic demand remaining firm. In Asia, Indonesia remained strong on robust domestic demand, while growth slowed in other major countries as external demand declined.」

「Regarding the export environment, concern about the significant impact of US-China trade friction was growing, although the US labor market expanded and personal consumption remained solid. In Europe, weakness in the industrial sector became more pronounced as exports slowed. In Asia, exports also began to slow noticeably as external demand declined.」

「Regarding the export environment, although the US-China trade war remained a concern, the US economy continued to expand, led by domestic demand, as the effects of tax cuts became evident and unemployment remained low. Europe also continued to expand on the back of increased employment and signs of accelerating wage growth. Asia followed a mixed path, with some countries facing currency concerns and slower growth.」

「During the first quarter of the current consolidated cumulative period, the domestic economy continued its gradual recovery as exports increased, capital investment remained firm and personal consumption recovered. Regarding the export environment, the US economy continued to expand, led by domestic demand, while Europe continued to grow gradually, driven by construction investment and personal consumption. Asia also continued to grow solidly, supported by higher resource prices and increased infrastructure investment.」

「Regarding the export environment, the United States continued to grow solidly as consumption spending expanded with improvements in employment conditions and capital investment resumed. Europe also continued to grow gradually, supported by solid exports and private demand. Asia likewise continued to grow solidly as the global economy expanded.」

「Regarding the export environment, although policy implementation in the United States remained uncertain, solid growth continued, supported by expanded personal consumption resulting from infrastructure investment and improvements in employment and income conditions. Europe also continued to grow solidly, supported by favorable employment conditions and increased consumption. Asia was generally firm, although China's economic growth rate continued to slow.」

「Regarding the export environment, although the outlook for policy under the new US administration was uncertain, the United States continued to grow gradually as manufacturing conditions remained firm and employment and personal consumption continued to improve.」

「In Europe, the economic impact of the UK's departure from the EU was limited, and a gradual recovery led by domestic demand continued. Meanwhile, concerns about an economic downturn intensified in China and other emerging and resource-rich economies as growth slowed.」

「In Europe, the impact on the global economy that had been feared as a result of the UK's departure from the EU was limited, and a gradual recovery led by domestic demand continued. In China, the slowdown continued, including exports falling substantially below the previous year, and this affected Asian countries as well.」

「In Europe, although concerns had been raised about the impact of the United Kingdom's decision to leave the EU (Brexit), the economy generally continued its gradual recovery, led by domestic demand. In China, the economy continued to slow gradually, and Asian countries likewise remained weak. Sharp exchange-rate fluctuations and the risk of a downturn in the global economy remain, and uncertainty about the economic outlook is expected to continue.」

「Looking ahead, in addition to heightened global geopolitical risks arising from the situation in the Middle East, uncertainty surrounding future political systems has deepened in the United States and Europe, increasing the downside risk to the economy.」