Financial Market Instability Resulting from Falling Commodity Prices and Uncertainty Over Emerging-Market and European Economies

「During the interim consolidated accounting period (1 March 2026 to 31 August 2026), Japan's economy remained on a moderate recovery track, supported by solid corporate earnings and improvements in employment and income conditions amid continued uncertainty surrounding domestic and international political and economic conditions. However, improvements in household real incomes remained limited due to rising prices, particularly energy prices, and consumers continued to favor saving and cautious purchasing behavior.」

「At the same time, we recognize a risk of a further downside in the pace of growth due to increasing instability in domestic and international political and economic conditions, supply shocks caused by higher crude oil prices, and the effects of persistent inflation.」

「Uncertainty in the external environment is increasing due to developments in countries' trade, fiscal and monetary policies, as well as rising geopolitical risks against the backdrop of heightened tensions in the Middle East and soaring resource prices.」

「During the interim consolidated accounting period (1 March 2025 to 31 August 2025), Japan's economy remained in an uncertain situation, affected by the fragile political foundation of the minority government, as well as the impact of US tariff policy and rising resource prices.」

「During the cumulative first quarter ended 31 May 2024 (1 March 2024 to 31 May 2024), Japan's economy continued to recover moderately after emerging from the effects of the three-year COVID-19 pandemic, despite the impact of higher prices caused by yen depreciation and surging resource prices.」

「During the consolidated fiscal year, Japan's economy continued to recover moderately despite the effects of yen depreciation, surging resource prices and heightened geopolitical risks, including intensifying conflicts in various parts of the world, as economic activity was revitalized following the end of the COVID-19 pandemic and corporate performance and employment and income conditions improved.」

「During the cumulative second quarter ended 31 August 2023 (1 March 2023 to 31 August 2023), Japan's economy continued to recover moderately despite the ongoing effects of yen depreciation and high resource prices, as the impact of COVID-19 eased further following its reclassification to Category 5 and normalization progressed.」

「During the cumulative first quarter ended 31 May 2023 (1 March 2023 to 31 May 2023), Japan's economy continued to recover moderately despite the ongoing effects of yen depreciation and high resource prices, as the impact of COVID-19 eased further following its reclassification to Category 5. Private consumption also remained generally firm, recovering rapidly due to pent-up demand as the pandemic subsided and supported by the boost to inbound demand following the easing of entry restrictions.」

「For current operating conditions, please refer to “3. Analysis of Financial Position, Operating Results and Cash Flow by Management.” Regarding the outlook, although the company will be affected by high resource prices, a slowdown in overseas economies and geopolitical risks such as the situation in Ukraine, it expects a full recovery in consumption as the impact of COVID-19 eases and inbound demand increases, and expects Japan's economy to continue recovering over the medium term.」

「More than 10 months after the outbreak of the Ukraine issue, no path toward resolution is yet visible. Although China has shifted its zero-COVID policy toward easing, uncertainty remains amid rising infections. In Europe and the US, continued central-bank rate hikes to curb inflation driven by higher energy and food prices are expected to end at higher terminal rates than previously assumed. The outlook for the economy and consumption remains a concern due to the high volatility of exchange-rate movements and other factors.」

「The Ukraine issue still shows no path toward resolution, while supply-chain disruptions caused by lockdowns under China's zero-COVID policy will take time to resolve. In addition, central banks are raising policy rates to curb inflation at a faster-than-expected pace amid higher energy and food prices. Recession concerns have emerged, partly due to yen depreciation primarily driven by interest-rate differentials between Japan and overseas markets, and the outlook for the economy and consumption remains uncertain.」

「The prolonged Ukraine issue, supply-chain disruptions caused by lockdowns under China's zero-COVID policy, and rising energy and food prices have led central banks to raise policy rates to curb inflation at a faster-than-expected pace. Concerns over recession have emerged, and the outlook for the economy and consumption remains uncertain.」

「A moderate economic recovery is expected, supported by increased external demand and government economic measures, despite the impact of developments in Ukraine and rising resource prices, with the consumption environment also expected to gradually become more active.」

「During the cumulative third quarter ended 30 November 2020 (1 March 2020 to 30 November 2020), Japan's economy was gradually recovering as economic activity resumed while the impact of COVID-19 continued globally. Although the spread of infection has fluctuated and the outlook remains uncertain, a gradual recovery is expected as vaccines and new treatments are developed, with differences in the timing of recovery depending on conditions in each region.」

「During the cumulative second quarter ended 31 August 2020 (1 March 2020 to 31 August 2020), Japan's economy, like the global economy, continued to be affected by the spread of COVID-19, which began at the end of the previous year and radically changed consumption trends. It remains uncertain whether the spread of infection can be contained. Although the economy is considered to have bottomed out, recovery is expected to remain gradual for the time being, with differences in the timing of recovery depending on conditions in each region. Even in developed economies, a return to pre-pandemic levels is not expected until 2022 or later.」

「During the cumulative first quarter ended 31 May 2020 (1 March 2020 to 31 May 2020), Japan's economy was in an extremely severe condition due to the impact of COVID-19 in Japan and overseas. Overseas economies also declined sharply due to the global pandemic, and exports and other areas fell substantially. Corporate earnings and business sentiment deteriorated, employment and income conditions showed signs of weakness, and private consumption declined substantially, particularly in services such as dining and accommodation. In addition, domestic consumption conditions deteriorated rapidly due to the sharp decline in inbound demand and other factors.」

「However, amid the inability to overcome the impact of repeated natural disasters and the downturn in consumer sentiment caused by the October 2019 consumption tax increase, domestic consumption conditions deteriorated rapidly due to rising uncertainty following the rapid spread of COVID-19 from January 2020 and the sharp decline in inbound demand, particularly from visitors to Japan.」

「The slowdown in the pace of global economic growth continued amid rising tensions over trade between the US and China. As a result, exports remained weak and business sentiment in the manufacturing sector became more cautious.」

「During the cumulative third quarter ended 30 September 2019 (1 January 2019 to 30 September 2019), Japan's economy was recovering moderately overall, although weakness in overseas economies, including trade issues, persisted, particularly in exports. Capital investment remained on a moderate upward trend, although some weakness was seen in machinery investment.」

「During the cumulative second quarter ended 30 June 2019 (1 January 2019 to 30 June 2019), Japan's economy grew moderately overall, although the slowdown in overseas economies affected exports and production. Capital investment remained on a moderate upward trend as corporate earnings improved.」

「Although the slowdown in overseas economies affected exports and production, the economy grew moderately overall, while capital investment remained on an upward trend against a backdrop of generally sound corporate earnings and business sentiment.」

「During the cumulative second quarter ended 30 June 2018 (1 January 2018 to 30 June 2018), Japan's economy continued to expand moderately, although risk factors included the need to monitor protectionist trade policies. Capital investment increased moderately as corporate earnings improved, while private consumption also increased moderately against a backdrop of steady improvements in employment and income conditions.」

「During the cumulative first quarter ended 31 March 2018 (1 January 2018 to 31 March 2018), Japan's economy was recovering moderately against a backdrop of steady improvements in employment and income conditions. Overseas economies also continued to grow steadily overall, and capital investment remained on an upward trend as corporate earnings and business sentiment improved. The economy is expected to continue expanding moderately, and domestic demand is expected to remain on an upward trend.」

「During the consolidated fiscal year, Japan's economy continued to recover moderately as employment and income conditions improved against a backdrop of government economic policies and improved corporate earnings. Financial and capital markets also remained stable, supported by overseas economies, particularly strong US economic conditions.」

「Although economic conditions in Europe, the US and emerging economies and destabilizing factors such as the North Korea issue remained, the economy continued to expand moderately, supported by government economic policies and improved corporate earnings.」

「During the cumulative second quarter ended 30 June 2017 (1 January 2017 to 30 June 2017), Japan's economy continued to expand moderately, despite risk factors including US economic policy, trends in emerging and resource-rich economies, and the UK's exit from the EU.」

「Although financial and capital markets were affected by downside risks to economic conditions in emerging and resource-rich countries and uncertainty over the outlook for the European economy, they also showed strength, with share prices rising toward year-end on expectations of a US economic recovery.」

「However, financial and capital markets remained unstable due to the impact of downside risks to economic conditions in emerging and resource-rich countries and uncertainty over the outlook for the European economy.」

「Japan’s financial markets also remained volatile, affected by falling commodity prices and uncertainty about the outlook for emerging-market and European economies.」