Sluggish Personal Consumption and Increased Uncertainty in the External Economic Environment

「Personal consumption remained firm and corporate capital investment also progressed steadily, resulting in a moderate recovery in the economy. However, the outlook remains uncertain, with concerns over downside risks to the global economy from worsening conditions in the Middle East.」

「However, the outlook remains uncertain, with concerns over the risk of sluggish personal consumption due to persistently high prices, as well as the impact of US trade policy and heightened tensions in the Middle East.」

「The outlook remains uncertain, owing to higher prices caused by the prolonged weakness of the yen, growing concerns over geopolitical risks, and the impact of policy developments in the United States.」

「The outlook remained uncertain because of concerns about rising geopolitical risks resulting from the prolonged impact of yen depreciation on prices and higher interest rates, as well as the prolonged Russian invasion of Ukraine and conflicts in the Middle East, with no end in sight.」

「Border controls on arrivals, which had been implemented to prevent the spread of COVID-19, were lifted in April, and the disease was reclassified as a Category V disease under Japan’s Infectious Diseases Control Law. The economy moved toward recovery as the number of visitors to Japan increased. However, uncertainty continued because domestic prices remained elevated due to yen depreciation and the Russian invasion of Ukraine was prolonged.」

「Restrictions were gradually eased and the economy moved toward recovery. However, the outlook remained uncertain as supply chain disruptions, a weaker yen, and the prolonged Russian invasion of Ukraine kept energy and other prices elevated.」

「Restrictions on movement and economic activity related to COVID-19 were eased and the economy was beginning to recover. However, voluntary restrictions on movement in response to concerns about a renewed spread of infections had not fully returned to pre-pandemic levels, while the prolonged situation in Ukraine led to soaring global resource and raw material prices and the sharp depreciation of the yen caused prices to rise, leaving the outlook uncertain.」

「Restrictions on movement and economic activity related to COVID-19 were eased, and signs of a recovery emerged. However, uncertainty continued because of latent concerns such as voluntary restrictions on movement resulting from the seventh and eighth waves of infections, the rapid depreciation of the yen, and accelerating global inflation caused by higher raw material and energy prices following Russia’s invasion of Ukraine.」

「During the cumulative second quarter, signs of a recovery emerged as restrictions on movement and economic activity related to COVID-19 were eased. However, uncertainty continued because of latent concerns such as voluntary restrictions on movement resulting from the seventh wave of infections, the rapid depreciation of the yen as the Bank of Japan continued its monetary easing policy while central banks worldwide tightened policy, and accelerating global inflation caused by higher raw material and energy prices following Russia’s invasion of Ukraine.」

「During the cumulative first quarter, Japan’s economy moved toward recovery as restrictions on economic activity were gradually eased with the continuation of measures to prevent the spread of COVID-19 and progress in third-dose vaccinations. However, the outlook remained uncertain as supply chain disruptions, a weaker yen, and higher energy prices resulting from Russia’s invasion of Ukraine combined to push up prices.」

「With the spread of the Omicron variant, the flow of people and consumer spending began to slow after the start of the year. It was expected to take time for the impact of COVID-19 to subside, and uncertainty continued because of increasing inflationary pressure from soaring crude oil prices and heightened tensions surrounding Ukraine.」

「Recovery began to emerge as vaccinations progressed and the number of infections declined. However, uncertainty remained about when the impact of COVID-19 would subside, partly because of the emergence of new variants.」

「During the cumulative second quarter, Japan’s economy remained uncertain. The renewed spread of COVID-19 led to repeated states of emergency and priority preventive measures, restricting economic activity and weakening consumption. The recovery remained sluggish, although vaccination was progressing.」

「The renewed spread of COVID-19 led to the implementation in some regions of a third state of emergency and priority preventive measures to prevent the spread of the disease, among other effects, and the difficult situation continued as consumption declined.」

「Infections also began to spread again in Europe and the United States, and uncertainty about the outlook for the global economy remained strong. The negative impact on economic activity was expected to be prolonged.」

「The number of new infections entered a phase described as the third wave, and uncertainty continued as a result of voluntary restraint on consumption and concerns about deterioration in employment and income conditions.」

「Amid the severe impact of the spread of COVID-19, a state of emergency was declared, and economic activity declined sharply because of deteriorating corporate performance and a rapid decrease in consumer spending, while recovery remained sluggish and the severe situation continued.」

「Amid the severe impact of the spread of COVID-19, a state of emergency was declared, and economic activity declined sharply, including as a result of a rapid decrease in consumer spending.」

「In addition to the negative effects of the consumption tax increase, the business environment became even more challenging as major customers closed their businesses and sales events were canceled in connection with measures to prevent the spread of COVID-19.」

「In the jewelry industry as well, negative effects from the consumption tax increase and weather factors were seen. Although consumer purchasing behavior had diversified, consumers overall continued to favor saving, competition among companies remained intense, and the business environment continued to be challenging.」

「In the jewelry industry as well, sales remained firm, supported by high-value product sales and inbound sales. However, consumers overall continued to favor saving amid increasingly diverse purchasing behavior, while intense competition among companies persisted, leaving the business environment challenging.」

「Corporate earnings showed signs of stagnation against the backdrop of US-China trade friction and a slowdown in the Chinese economy. The resulting volatility in equity markets and the psychological impact of the consumption tax rate increase also meant that uncertainty about the economic outlook remained unresolved.」

「In the current economic environment, the economy expanded moderately, supported by capital investment resulting from improved corporate earnings and an improvement in consumer spending, amid growing concerns about the risks of natural disasters such as earthquakes and torrential rains. However, the outlook remained uncertain because of concerns about global trade friction and geopolitical risks, the resulting volatility in equity markets, and the psychological impact of the consumption tax rate increase.」

「During the cumulative third quarter, Japan’s economy continued to recover gradually, supported by increased capital investment resulting from improved corporate earnings and an improved employment environment. However, the outlook remained uncertain because of overseas geopolitical risks and US-China trade friction. In the jewelry industry, sales remained firm, supported by high-value product sales and inbound sales, but consumers overall continued to favor saving amid increasingly diverse purchasing behavior, while intense competition among companies continued, leaving the business environment challenging.」

「In the jewelry industry as well, high-value products performed well on consumption by affluent customers and inbound demand. However, consumers continued to favor saving overall, partly because purchasing behavior had diversified, and competition among companies continued to intensify, leaving the business environment challenging.」

「Threat factors include the contraction of the domestic market, intensifying competition with overseas brands, competition for market share with leading domestic brands, and the decline of retail customers resulting from competition between e-commerce businesses and physical stores.」

「Consumption by inbound visitors and affluent customers remained firm, as it had previously, while middle-income consumers in the core volume segment continued to hold back on purchases and favor saving, and the polarization of consumption continued.」

「In the jewelry industry as well, some recovery has been seen in high-value purchases at department stores and elsewhere, as well as in inbound consumption. However, amid economic uncertainty, consumption remained polarized overall, and the preference among middle-income consumers, the core of the volume segment, to save on purchases of jewelry and other products remained unchanged, leaving the industry environment challenging.」

「In the jewelry industry as well, consumer spending remained under pressure amid uncertainty about the economic outlook, as consumers’ preference for saving remained unchanged, and the environment surrounding the industry continued to be challenging.」

「In the jewelry industry as well, consumer spending declined amid uncertainty about the economic outlook, as consumers’ preference for saving remained unchanged, resulting in a challenging industry environment.」

「In the jewelry industry as well, consumers’ preference for saving remained unchanged amid uncertainty about the outlook, and the environment surrounding the industry remained challenging. In particular, consumption of jewelry by middle-income consumers, the core volume segment, remained under severe pressure.」

「The environment surrounding the industry remained challenging, as consumer spending declined amid a stronger preference for saving. In particular, consumption patterns among middle-income consumers, the core volume segment, shifted toward protecting household finances, resulting in weak consumer spending on jewelry and making the industry environment increasingly difficult.」

「The economy remained in an uncertain environment, owing to concerns about a sharp appreciation of the yen, a slowdown in emerging economies such as China, downside risks to overseas economies including the UK’s decision to leave the EU, and prolonged weakness in consumer spending, as well as the initial signs of deterioration in corporate earnings.」

「Consumer spending on jewelry has yet to make a full recovery and remains weak, owing in part to declining real incomes. With changes in consumption attitudes among middle-income consumers, our core volume segment, and changes in consumption by affluent consumers following the stock market’s decline since the beginning of the year, we expect the uncertain environment to continue for longer than before.」