Uncertainty in the Business Environment Due to a Global Economic Slowdown, Geopolitical Risks, Brexit and Yen Appreciation

「During the fiscal year under review, Japan's economy continued a gradual recovery, supported by firm corporate earnings and improvements in the employment and income environment. However, while supply constraint factors such as persistently high resource and material prices and tight supply and demand in the labor market continued, conditions in the Middle East rapidly intensified during the year. Concerns grew over further increases in resource and material prices due to higher crude oil prices and longer delivery times, further increasing uncertainty about the outlook, and companies' earnings environment remained difficult.」

「資源・資材価格の高止まりや労働市場の需給逼迫といった供給制約要因が続く中、今年に入り中東情勢が急速に緊迫化し、原油価格上昇の影響を受けた資源・資材価格の一段の上昇や納期の長期化への懸念が高まる等先行きの不透明感が一段と強まっており、企業の収益環境としては厳しい状況が続いております。」

「During the interim period under review, Japan's economy showed improvements in business confidence, including an increase in the manufacturing DI in the September 2025 Tankan survey compared with the previous survey, as caution receded following the Japan-U.S. agreement on tariff negotiations. However, supply constraints, including persistently high resource and material prices and tight supply and demand in the labor market, continued, leaving companies' earnings environment unstable.」

「We expect the business environment surrounding our company to remain uncertain, due to persistently high costs, including resource and material prices, and concerns that U.S. tariff policy may affect the production and investment environment of Japanese manufacturers. In addition, we expect our earnings environment to continue to be affected by developments in geopolitical risks in Ukraine and the Middle East, as well as trends in financial markets and foreign exchange rates.」

「During the interim period under review, there were also positive signs in Japan's economy, including private final consumption in real GDP growth for the April-June quarter turning positive for the first time in 5 quarters. However, the business environment remained unstable, as resource and material prices remained high, various costs continued to rise, the coincident index of business conditions remained essentially flat, and machinery orders showed signs of stagnation in their post-COVID recovery.」

「During the third quarter under review, Japan's economy remained unstable due to commodity supply constraints and price increases resulting from the prolonged situation in Ukraine and worsening conditions in the Middle East, the effects of global monetary tightening, and rising consumer prices caused by the prolonged trend of yen depreciation. Against this backdrop, the post-COVID economic recovery also slowed, as real GDP growth for the July-September quarter turned negative.」

「During the second quarter under review, Japan's economy remained in a difficult situation. Although various restrictions related to the COVID-19 pandemic were being almost completely eliminated, supply constraints and price increases for commodities such as food and energy resulting from the prolonged situation in Ukraine, the prolonged trend of yen depreciation, and the resulting increase in consumer prices continued to pose risks to the stability of the Japanese economy.」

「During the first quarter under review, Japan's economy generally returned to a normal course, as COVID-19 was officially reclassified as a Class 5 disease in May and restrictions on overseas travel were almost completely lifted. However, supply constraints and price increases for commodities such as food and energy, resulting from the prolonged situation in Ukraine, and the prolonged trend of yen depreciation continued to pose risks to the stability of Japan's economy. In manufacturing, although delays in the supply of production materials caused by supply chain disruptions were improving, procurement and costs remained unstable in some areas.」

「Meanwhile, supply constraints and price increases for commodities such as food and energy, resulting from the prolonged situation in Ukraine, and moves by central banks in various countries to raise interest rates affected the global economy as a whole and, in turn, contributed to uncertainty in Japan's economy. In manufacturing, although supply chain disruptions were gradually being resolved as countries around the world shifted to policies for living with COVID-19, delays in supplying production materials in some areas remained unresolved, and procurement and costs continued to be unstable.」

「During the first nine months of the fiscal year under review, Japan's economy gradually moved toward normalization despite the risk of disruption to social and economic activity, as the eighth wave of COVID-19 infections began in November, no measures involving restrictions on activity were implemented as during the seventh wave from July onward, and restrictions on entry into Japan from overseas also began to be eased. Meanwhile, uncertainty in the domestic economy continued to increase due to soaring energy and raw-material prices resulting from the prolonged situation in Ukraine and sharp, substantial fluctuations in the yen exchange rate.」

「During the first six months of the fiscal year under review, Japan's economy remained in a difficult situation. Although the seventh wave of COVID-19 infections peaked, particularly from July onward, no measures involving restrictions on activity, such as a state of emergency, were implemented in preparation for living with COVID-19, and efforts to normalize social and economic activity intensified. Meanwhile, uncertainty in the domestic economy continued to increase due to soaring energy and raw-material prices resulting from the prolonged situation in Ukraine and the rapid and substantial depreciation of the yen. In manufacturing, although the normalization of supply chains was gradually expected as living with COVID-19 became established and the Shanghai lockdown was lifted in June, procurement and costs remained unstable, with delays in material supplies continuing to occur in some areas.」

「During the first quarter of the fiscal year under review, Japan's economy showed signs of moving toward normalization as restrictions on economic activity were eased despite the continuing impact of COVID-19. However, the outlook remained uncertain due to soaring energy and raw-material prices resulting from the prolonged situation in Ukraine and the rapid depreciation of the yen. In manufacturing, procurement and costs also remained unstable, with delays in the supply of materials occurring in some areas amid tight supply and demand for electronic components, resin components and other materials.」

「During the fiscal year under review, Japan's economy moved toward recovery as waves of COVID-19 infections arrived intermittently and economic activity proceeded on a "living with COVID-19" basis while efforts were made to balance infection control with economic activity. However, combined with soaring energy prices and shortages of electronic components, including semiconductors, the situation left the outlook for domestic economic activity uncertain.」

「During the first nine months of the fiscal year under review, Japan's economic recovery was slow from the first to the second quarter, as repeated declarations of a state of emergency and priority preventive measures were implemented due to the resurgence of COVID-19. In the third quarter, however, the number of infections began to decline and social and economic activity moved toward recovery. Nevertheless, from December onward, the rapid global increase in infections caused by the highly transmissible Omicron variant again made the outlook for domestic economic activity uncertain.」

「During the first six months of the fiscal year under review, Japan's economy remained in a difficult situation, as the state of emergency continued for almost the entire period due to the resurgence of novel coronavirus infections. Although signs of an economic recovery emerged, including corporate earnings led by exports and capital investment, supported by recoveries in the U.S., European and Chinese economies, personal consumption remained sluggish. In addition, the impact of supply constraints on electronic components, including semiconductors, on the economic recovery was a concern, and uncertainty about the outlook for global economic activity continued.」

「During the first quarter of the fiscal year under review, Japan's economy remained in a difficult situation, as there were still no signs that the novel coronavirus pandemic was coming under control and restrictions on economic and consumer activity continued. The effects of U.S.-China trade friction also remained a concern, leaving the outlook for global economic activity uncertain.」

「During the fiscal year under review, Japan's economy became extremely difficult as waves of novel coronavirus infections continued to occur, despite efforts to balance infection control with economic activity. Economic and consumer activity remained weak, with no signs of containment, and the effects of U.S.-China trade friction continued to be a concern, leaving the outlook for economic activity uncertain.」

「During the first six months of the fiscal year under review, Japan's economy remained in an extremely difficult situation, as the global economy deteriorated due to intensifying U.S.-China trade friction, corporate exports and production activity remained weak, and the worldwide spread of the novel coronavirus caused economic and consumer activity to retreat sharply, resulting in a rapid deterioration in economic conditions.」

「During the first quarter of the fiscal year under review, the global economy remained generally sluggish due to U.S.-China trade friction and stagnation in the Chinese and emerging-market economies. In Japan, overseas demand remained weak while novel coronavirus infections spread, and the outlook remained uncertain because there was no clear prospect of containment.」

「During the fiscal year under review, Japan's economy slowed as the global economy decelerated due to prolonged U.S.-China trade friction, corporate exports and production activity remained weak, and the consumption tax increase and a series of major typhoons also weighed on the economy. In addition, the spread of the novel coronavirus infection since January has had a significant impact on the Japanese and global economies, creating an uncertain outlook.」

「During the first nine months of the fiscal year under review, the global economy remained sluggish overall amid growing uncertainty, as U.S.-China trade friction reached a Phase One agreement but the risk of further conflict remained, and geopolitical risks increased in the Middle East and East Asia. Although Japan's employment environment remained favorable, exports and capital investment remained weak, and the domestic economy continued to slow overall.」

「During the first six months of the fiscal year under review, the global economy's slowdown intensified amid growing uncertainty due to U.S.-China trade friction and Brexit. Although Japan's employment environment remained favorable, production activity lacked strength because of sluggish external demand, and capital investment stagnated.」

「During the first quarter of the fiscal year under review, the global economy became increasingly uncertain as the Chinese economy slowed, the U.S. and European economies lacked strength, and U.S.-China trade friction and other issues intensified. In Japan, although the employment and income environments showed improvement, corporate business confidence, particularly in manufacturing, weakened due to sluggish external demand. In the electrical machinery and other industries that include our major customers, companies were seen postponing capital investment due to deterioration in overseas conditions and other factors.」

「During the fiscal year under review, the U.S. economy remained firm, while the Chinese and European economies continued to slow. In Japan, personal consumption and employment income continued to improve, but the economy generally lacked strength, as capital investment and exports, which have a relatively significant impact on our company, remained sluggish.」

「During the first nine months of the fiscal year under review (1 April 2018 to 31 December 2018), the global economy was in a situation of emerging uncertainty, as economic expansion continued in the United States against a backdrop of favorable corporate earnings and employment conditions, while signs of a slowdown appeared in China. Japan's economy continued to expand gradually overall, with capital investment and personal consumption remaining resilient despite a succession of natural disasters.」

「During the first six months of the fiscal year under review (1 April 2018 to 30 September 2018), the global economy continued to expand, with growth in the United States and Europe led by domestic demand, while Asia maintained stable growth due to firm domestic demand and accelerating exports. Japan's economy generally remained in a gradual expansionary phase, with personal consumption and capital investment remaining firm.」

「During the first quarter of the fiscal year under review (1 April 2018 to 30 June 2018), the global economy expanded gradually overall, with personal consumption and capital investment in the United States and Europe continuing to trend upward, while personal consumption in China remained firm against a backdrop of favorable employment and income conditions. Japan's economy continued on a gradual recovery trend, with corporate earnings and capital investment remaining firm against a backdrop of the global economic recovery.」

「During the first nine months of the fiscal year under review (1 April 2017 to 31 December 2017), the global economy remained generally firm despite uncertainty arising from political conditions in the United States and Europe and heightened geopolitical risks in East Asia. Against this backdrop, Japan's economy remained on a gradual expansionary trend, as corporate earnings and the employment and income environment improved and capital investment continued to increase.」

「During the first six months of the fiscal year under review (1 April 2017 to 30 September 2017), Japan's economy remained on a gradual recovery trend, with personal consumption and capital investment turning upward against a backdrop of sustained global economic growth. Meanwhile, uncertainty about the outlook continued due to heightened geopolitical risks in some regions and policy developments in the United States and Europe.」

「The global economy is generally expected to remain on a recovery trend, and domestic capital investment is also expected to increase, including investment in research and development. However, it cannot be ruled out that investment may become somewhat more cautious depending on developments in the United States and Europe, and an uncertain situation that does not permit confident predictions is expected to continue for the time being.」

「The global economy is generally expected to remain on a recovery trend, and domestic capital investment is also expected to increase, including investment in research and development. However, it cannot be ruled out that investment may become somewhat more cautious depending on the policies of the new U.S. administration inaugurated on 20 January 2017, and an uncertain situation that does not permit confident predictions is expected to continue for the time being.」

「During the first six months of the fiscal year under review (1 April 2016 to 30 September 2016), the global economy remained generally weak, as the economies of advanced countries maintained a recovery led by domestic demand while the Chinese economy continued to slow. Meanwhile, although signs of a recovery in personal consumption began to emerge in Japan, corporate business confidence and capital investment generally remained lackluster, and the measuring instruments industry in which we operate also remained subject to uncertainty.」

「During the first quarter of the fiscal year under review (1 April 2016 to 30 June 2016), the global economy showed signs of slowing overall, as the economies of emerging countries, particularly China, continued to slow amid structural adjustments, while advanced economies continued to recover, driven by domestic demand, and geopolitical risks increased due to the frequent occurrence of terrorist attacks and other events.」