China and Emerging Market Slowdown, Lower Crude Oil Prices, Interest Rate and Geopolitical Risks

「Under these economic conditions, net sales for the cumulative first quarter of the fiscal year amounted to ¥154.564 billion, an increase of 0.4% year on year. In terms of profit, operating profit increased 6.2% to ¥10.218 billion and ordinary profit increased 11.0% to ¥10.832 billion. In addition, as a result of progress in reducing cross-shareholdings, profit attributable to owners of the parent increased 40.9% to ¥8.873 billion.」

「The global economy during the fiscal year under review showed signs of recovery in production, investment and consumption, but adjustments for excess supply in China and worsening conditions in the Middle East weighed on the global economy. Against this backdrop, Japan's domestic economy continued to see robust investment in capacity expansion, replacement and environmental projects, while the ongoing impact of tariff issues and slower growth in China, together with labor shortages and wage increases and, more recently, worsening conditions in the Middle East, affected consumption- and logistics-related activities.」

「During the six-month period of the fiscal year under review, uncertainty increased as trade issues in various countries, amid slowing growth, drove up cost pressures in manufacturing, which in turn affected consumer sentiment through higher prices. In the United States, tariff issues pressured corporate earnings, and personal consumption showed signs of slowing.」

「The recovery in manufacturing production lacked strength, and rising tariff risks increased economic uncertainty. In China, infrastructure and capital investment showed signs of a policy-driven recovery, but weak external demand, sluggish housing sales and weak personal consumption affected domestic demand and the production activities of Japanese companies.」

「During the six-month period of the fiscal year under review, the global economy showed signs of recovery, supported by moves toward interest-rate cuts in major countries, a recovery in semiconductor demand driven by growing generative AI demand, and firm capital investment appetite among global companies, while easing inflationary pressure suggested that consumption had bottomed out. In the United States, capital investment in manufacturing showed some weakness, but favorable income conditions supported personal consumption, and the economy remained firm, led by domestic demand. In China, exports showed signs of growth, particularly in EVs and semiconductors, but sluggish housing sales and personal consumption, among other factors, affected domestic demand and the production activities of Japanese companies. In Southeast Asia, exports remained strong due to recovering demand for IT-related products and semiconductors, despite the impact of U.S.-China trade friction and other factors, while domestic demand remained firm as employment and income conditions improved. In Japan, exports increased due to the recovery in semiconductor demand and capital goods, but some manufacturing companies were affected by declining exports to China. Domestic demand also showed signs of recovery despite labor shortages, supported by a recovery in inbound demand and improved income conditions, while capital investment remained firm.」

「The global economy during the fiscal year under review remained uncertain due to the leveling off of post-pandemic rebound demand, stalled trade in manufactured goods and digital-related products, and sharp foreign exchange fluctuations. In the United States, personal consumption remained firm due to favorable employment conditions, but capital investment remained weak amid worsening financing conditions and weakness in manufacturing continued. In China, services consumption showed signs of recovery after the zero-COVID policy was lifted, but the pace of economic recovery lacked strength due to slowing exports and imports and the prolonged real estate downturn.」

「During the first nine months of the fiscal year under review, the global economy remained uncertain as post-pandemic rebound demand leveled off and trade in manufactured goods and digital-related products stagnated. In the United States, personal consumption remained firm due to favorable employment conditions, but the housing market and capital investment remained weak amid worsening financing conditions, and the adjustment in manufacturing continued for an extended period. In China, services consumption continued to recover after the zero-COVID policy was lifted, but the pace of economic recovery remained moderate due to slowing exports and imports, the prolonged real estate downturn and deflationary sentiment.」

「During the first half of the fiscal year under review, the global economy was driven by post-pandemic rebound demand, but remained uncertain due to stalled trade in manufactured goods and digital-related products and persistently high inflation. In the United States, personal consumption remained firm due to favorable employment conditions, but uncertainty about the outlook increased as capital investment weakened amid worsening financing conditions and the manufacturing sector entered an adjustment phase. In China, the recovery in the real estate market and services consumption leveled off after the zero-COVID policy was lifted, and the pace of economic recovery slowed due to slowing manufacturing recovery, signs of slower exports and deflationary sentiment.」

「During the first quarter of the fiscal year under review, the global economy was driven by post-pandemic rebound demand, but remained uncertain due to stalled trade in manufactured goods and digital-related products and persistently high inflation. In the United States, capital investment remained weak due to worsening financing conditions, but personal consumption remained firm on the back of favorable employment conditions. In China, the real estate market and services consumption continued to recover after the zero-COVID policy was lifted, but the pace of economic recovery slowed due to a weakening manufacturing recovery, signs of slowing exports and other factors.」

「During the first nine months of the fiscal year under review, the global economy remained uncertain due to the prolonged situation involving Russia and Ukraine, surging raw material and energy prices, and other factors. In the United States, personal consumption remained generally firm, supported by favorable employment and income conditions underpinned by solid corporate performance despite sharp increases in interest rates and prices. In China, growth slowed due in part to restrictions on economic activity under the zero-COVID policy, although signs of recovery have recently emerged.」

「During the first half of the fiscal year under review, the global economy remained uncertain due to the prolonged situation involving Russia and Ukraine, surging raw material and energy prices, and the impact of COVID-19. In the United States, personal consumption remained generally firm, supported by favorable employment and income conditions underpinned by solid corporate performance despite sharp increases in interest rates and prices. In China, growth slowed due in part to restrictions on economic activity under the zero-COVID policy, although signs of recovery have recently emerged. In Japan, the outlook remained uncertain due in part to higher prices resulting from rising resource prices amid the situation in Ukraine and the sharp depreciation of the yen in foreign exchange markets.」

「In Japan, the number of infections was contained as COVID-19 vaccinations progressed, and personal consumption showed signs of recovery as activity restrictions were eased. However, the outlook remains uncertain due in part to the impact of higher prices resulting from rising resource prices amid the situation in Ukraine and the sharp depreciation of the yen in foreign exchange markets.」

「Meanwhile, in China, growth continued to slow due to sluggish real estate investment and restrictions on economic activity under the zero-COVID policy. Japan's domestic economy was also recovering, but growth slowed following the spread of the Omicron variant from the beginning of 2022. In addition, global uncertainty has increased recently due to surging resource prices resulting from the situation in Ukraine and other factors.」

「During the first nine months of the fiscal year under review, the global economy continued to recover, albeit with variations among countries and regions, but the pace of recovery slowed compared with the previous fiscal period. In the United States, the recovery slowed due to supply constraints caused by the spread of the Delta variant and congestion in maritime logistics. In China, production slowed amid decelerating real estate investment and worsening shortages of electricity and materials, while emerging markets were forced to suspend economic activity due to strict restrictions on movement associated with the spread of the Delta variant.」

「During the first half of the fiscal year under review, the global economy clearly entered a recovery phase, but the recovery became increasingly two-speed depending on progress with vaccinations. In Japan, business sentiment in the manufacturing sector improved against a backdrop of firm exports to the United States and China, but supplies of parts from countries and regions affected by COVID-19 were disrupted, causing production delays at some companies.」

「During the first quarter of the fiscal year under review, differences in the degree of economic recovery among countries and regions became more pronounced due to differences in the pace of COVID-19 vaccine rollouts.」

「The global economy during the fiscal year under review remained in an extremely challenging situation due to the impact of COVID-19. Although the overall trend was toward recovery, disparities in the pace of recovery became more pronounced as infections resurged in some regions, and the outlook remains uncertain.」

「During the nine-month period of the current fiscal year, the global economy continued to be affected by COVID-19, and the pace of recovery varied. In China, the pace of growth in infrastructure and property investment, which had led the recovery, slowed, but recovery became more pronounced, centered on manufacturing investment and personal consumption. In the United States, growth in personal consumption led the overall economy, while housing investment adapted to remote work and corporate IT investment led the recovery through demand for adaptation to the COVID-19 environment. In Europe and emerging markets, however, recovery stalled in some regions due to a resurgence of infections. In Japan, automobiles and production machinery showed signs of recovery as demand recovered in Japan and overseas, and exports continued to increase.」

「During the six-month period of the current fiscal year, China's economy, which resumed economic activity ahead of the rest of the world amid the COVID-19 pandemic, showed signs of recovery, but improvement in private demand was slow and the recovery was driven mainly by infrastructure investment. In the United States, the automobile industry, which had been leading the recovery, began to slow, and conditions remained difficult amid the accelerating spread of COVID-19. In Japan, the economy showed signs of recovery after the lifting of the state of emergency, supported by the easing of restrictions on going out, but exports remained weak, inbound demand was almost zero, and corporate capital investment continued to decline amid uncertainty over the economic recovery.」

「During the three-month period of the current fiscal year, the global economy was in an extremely difficult situation as economic activity slowed sharply due to the spread of COVID-19, while disruptions and cascading disturbances across supply chains for procurement, manufacturing, sales and transportation originating in China persisted. In Japan, exports declined substantially amid China's economic stagnation, while weak inbound demand and lower services consumption caused by COVID-19 further worsened corporate earnings, leading companies to reduce their capital investment.」

「During the current consolidated fiscal year, the global economy remained uncertain against the backdrop of US-China trade friction and other factors, but economic activity slowed sharply worldwide from the beginning of the year due to the spread of COVID-19, making the economic downturn increasingly apparent. In Japan, exports declined due to China's economic stagnation, while inbound demand and services consumption fell because of COVID-19. As concern grew over the resulting deterioration in corporate earnings, capital investment also followed a declining trend toward the fiscal year-end.」

「During the nine-month period of the current fiscal year, adjustment pressure in global manufacturing continued, and leading economic indicators also suggested a continuing slowdown. In the United States, employment statistics remained firm, but business conditions were weak in both manufacturing and non-manufacturing, and personal consumption showed signs of slowing recently. In China, government measures to support the economy prevented a sharp decline, but conditions remained weak, while Asia also showed signs of slowing under the impact of US-China tensions. In Japan, manufacturing stagnated amid weak exports. Domestic demand, meanwhile, saw firm capital investment against the backdrop of high corporate earnings, but personal consumption fell sharply due in part to a decline in demand brought forward before the consumption tax increase.」

「During the six-month period of the current fiscal year, the global economy remained sluggish and uncertain, partly due to escalating US-China trade friction. In the United States, personal consumption remained resilient, but capital investment slowed and real GDP growth declined from the first quarter. In China, the prolonged and intensified US-China friction weighed on overall exports, while manufacturing investment slowed notably. In Asia, growth rates declined quarter on quarter in many countries, and declines or slowdowns in exports became apparent against the backdrop of China's economic slowdown. In Japan, the external demand environment showed increasingly clear signs of slowing, while demand brought forward ahead of the consumption tax increase was less pronounced than during the previous tax increase, resulting in a lackluster performance.」

「During the three-month period of the current fiscal year, the global economy remained uncertain amid concern over a further escalation of US-China trade friction and geopolitical risks. In China, exports to the United States continued to decline year on year, weighing on overall exports, while industrial production and investment showed a notable slowdown.」

「During the nine-month period of the current fiscal year, personal consumption in the United States remained firm, but capital investment showed signs of pausing, and concern grew over increased downside risks due to uncertainty caused by US-China trade friction. In Europe, exports slowed amid stagnant external demand, possibly affecting capital investment, and the overall economy followed a slowing trend. China's economy stagnated from August onward. Exports remained firm, but items subject to US sanctions slowed, while consumption also declined, particularly automobile sales. If US-China tensions intensify further, worsening business and consumer sentiment could lead to downside risks in exports and capital investment, raising uncertainty over the outlook and potentially weighing on the global economy.」

「During the six-month period of the current fiscal year, the US economy continued to expand, driven by the effects of tax cuts, personal consumption and capital investment, while the European economy remained flat or followed a slowing trend. China entered a phase of gradual slowdown due to structural adjustments aimed at reducing financial risks, and growth rates in many Asian emerging economies also declined as a result of China's slowdown. If US-China trade friction intensifies, there is concern that the global economy could be pushed lower as uncertainty over the outlook increases. In Japan, exports and production activity were affected by torrential rains and other disasters, but personal consumption and capital investment were recovering. Despite higher costs including crude oil prices and labor costs, the real economy remained firm.」

「During the three-month period of the current fiscal year, the global economy remained fundamentally firm, although growth slowed in the United States and Europe and there were concerns over expanding protectionism and rising crude oil prices. Asian emerging economies were affected by a gradual slowdown in China against the backdrop of its structural reforms, but economic conditions remained generally resilient.」

「During the current consolidated fiscal year, the global economy remained on a gradual recovery trend overall, centered on robust economies in the United States and Europe, despite uncertainty over the outlook, including downside risks in China and geopolitical risks. In Japan, exports and production activity recovered, corporate earnings improved, and personal consumption and private capital investment remained firm, with the economic recovery continuing.」

「During the nine-month period of the current fiscal year, the global economy continued on a gradual recovery trend overall, although investment declined as China adjusted excess production capacity and economic expansion led to higher stock prices. In Japan, exports and production activity recovered, corporate earnings continued to improve, and domestic demand, including personal consumption and capital investment, remained firm, with the economy continuing to expand gradually.」

「The business environment remains uncertain both in Japan and overseas, due to a decline in the working-age population and contraction in domestic demand associated with Japan's declining birthrate and aging population, as well as slower growth in emerging and resource-rich countries and political and geopolitical risks overseas.」

「In Asia, the pace of China's growth slowdown moderated as fiscal stimulus provided support and property-related investment expanded. In emerging markets, signs of a bottoming out spread against the backdrop of a rebound in resource prices, and the overall economy entered a gradual recovery trend.」

「Over the medium to long term, the outlook in Japan and abroad remains uncertain and challenging, due to declining domestic demand and the working-age population resulting from Japan's declining birthrate and aging population, slower growth in China and other emerging and resource-rich countries, and political and geopolitical risks.」