Risk of a stronger yen, falling share prices, weak domestic and external demand, and deteriorating consumer sentiment

「As a result, consumers continued to become more inclined to save and to hold back on purchases, and uncertainty over the economic outlook continued.」

「Meanwhile, persistently high raw material and energy prices continued to weigh on corporate earnings, while inflation outpaced improvements in employment and income conditions and consumers remained firmly focused on saving, particularly on necessities. As a result, the economy did not achieve a full-fledged recovery and remained in an uncertain environment.」

「During the interim accounting period, Japan’s economy slowed as a result of the impact of US tariff policies and higher prices. Corporate earnings remained firm, but private consumption did not achieve a full-scale recovery. Although the employment and income environment improved against a backdrop of wage increases and labor shortages, wage growth failed to keep pace with price increases and real income declined. Persistently high energy prices and sharp price increases for rice and other grains squeezed households’ real purchasing power, while consumer sentiment remained stagnant.」

「Services consumption, including accommodation, food services and leisure, remained firm due to improvements in the employment and income environment against a backdrop of wage increases, but challenges including higher prices and stagnant consumer sentiment remained, leaving overall consumption lacking momentum.」

「Services consumption, including accommodation, food services and leisure, remained firm due to improvements in the employment and income environment against a backdrop of wage increases, but real wages remained negative and overall consumption lacked momentum.」

「Looking ahead, concerns remain that inflation will accelerate due to factors including increased geopolitical risks resulting from unstable overseas conditions, persistently high crude oil prices due to yen depreciation, and higher logistics costs related to the so-called 2024 logistics problem, leading to deterioration in real income, sluggish consumption and an economic downturn.」

「Looking ahead, concerns remain that consumption will stagnate and the economy will deteriorate as real income declines due to increased geopolitical risks in Ukraine and the Middle East, prolonged high crude oil prices resulting from yen depreciation, and continued inflation, particularly for daily necessities and food.」

「During the cumulative second quarter period, Japan’s economy moved toward a gradual recovery as economic activity resumed and various events returned following the reclassification of COVID-19 as Category 5 under the Infectious Diseases Control Law. Private consumption showed signs of recovery as consumer sentiment improved due to increased opportunities to go out, rebound demand, the spread of wage increases and other improvements in the employment and income environment. However, consumers increasingly sought to hold back on purchases due to repeated price increases for food and daily necessities. Looking ahead, concerns remain that the economy will deteriorate as higher prices caused by rising energy costs and yen depreciation cause improving consumer sentiment to decline again, and due to the impact of prolonged geopolitical risks, including the situation in Ukraine.」

「During the cumulative first quarter period, Japan’s economy showed signs of recovery, particularly in private consumption and inbound demand, as restrictions on activities related to COVID-19 were removed and the disease was reclassified as Category 5 under the Infectious Diseases Control Law. However, energy costs and prices continued to rise due to prolonged geopolitical risks, including the situation in Ukraine, and soaring crude oil and material prices, leaving the situation uncertain.」

「During the fiscal year, although the spread of COVID-19 repeatedly expanded and contracted, restrictions on activities were eased in the second half of the fiscal year and socioeconomic activity moved toward normalization. However, the economic outlook remained uncertain due to factors including prolonged geopolitical risks surrounding the situation in Ukraine, soaring crude oil and material prices and yen depreciation. Private consumption showed signs of recovery, particularly in services, as the flow of people recovered following the easing of restrictions on activities, but rising prices across a broad range of areas, including energy, daily necessities and food, dampened consumer sentiment just as it had begun to improve.」

「During the cumulative third quarter period, Japan’s economy showed signs of recovery due to the easing of restrictions related to COVID-19 and firm corporate earnings, but uncertainty over the outlook continued because of unstable factors including soaring crude oil and material prices and rapid yen depreciation. Private consumption showed signs of recovery, particularly in services, due to increased opportunities to go out as infections declined, government travel support measures and the easing of border control measures. However, higher prices spread across a wide range of areas, including energy, daily necessities and food, dampening consumer sentiment just as it had begun to improve. Looking ahead, concerns remain that the prolonged Russia-Ukraine conflict will keep crude oil and material prices elevated, with the resulting further inflation putting downward pressure on real income and leading to sluggish consumption and economic deterioration.」

「During the cumulative second quarter period, Japan’s economy showed signs of recovery against a backdrop of progress toward normalization of economic activity as restrictions related to COVID-19 were eased and corporate earnings remained firm. However, uncertainty over the outlook continued due to factors including the sharp increase in infections caused by the seventh wave and soaring crude oil and material prices. Private consumption showed signs of recovery as the easing of restrictions on activities increased the flow of people, but inflation resulting from the situation in Ukraine and rapid yen depreciation pushed down real wages, leaving improvements in the income environment lacking momentum.」

「During the cumulative first quarter period, Japan’s economy showed signs of recovery as restrictions on activities were eased while the spread of COVID-19 subsided. However, uncertainty over the outlook continued due to soaring crude oil and material prices, the rapid depreciation of the yen and the impact of lockdowns in Chinese cities under China’s zero-COVID policy.」

「Private consumption showed signs of improvement in the second half of the fiscal year as restrictions on activities were eased with progress in vaccinations, but consumer sentiment did not achieve a full-scale recovery after the start of the year due to the spread of the Omicron variant. Going forward, concerns remain that the economy will enter a recession due to factors including unstable international conditions driving up the prices of raw materials, including crude oil, the resulting deterioration in corporate earnings and the employment and income environment, and declining consumer sentiment caused by higher prices for food and daily necessities.」

「Private consumption did not achieve a full-scale recovery, although consumer sentiment gradually improved due to the decline in new infections and the easing of restrictions on activities, as the pace of improvement in the employment environment remained slow, among other factors.」

「Consumer sentiment has gradually improved following the start of nationwide vaccinations for older people and adults and the rising vaccination rate, but improvements in the employment and income environment have lagged and lacked momentum. Going forward, although the number of infections is trending downward as people refrain from activities and vaccination rates improve, the employment and income environment and private consumption are expected to require more time to recover.」

「Private consumption did not achieve a full-scale recovery due to delays in the recovery of the employment and income environment and the impact of the spread of COVID-19 on consumer sentiment. Going forward, concerns remain that prolonged delays in the recovery of the employment and income environment will reduce overall disposable income, resulting in sluggish consumption and a deterioration in the economy.」

「During the fiscal year, Japan’s economy became very difficult as the global spread of COVID-19 severely affected economic activity and the economy remained sluggish. In particular, the issuance of the state of emergency twice dealt a severe blow, particularly to industries providing services to individuals. Private consumption fell sharply as a result of the rapid deterioration in the employment and income environment and heightened caution and the mood to refrain from going out in response to the spread of infections.」

「During the cumulative third quarter period, Japan’s economy remained in a very difficult situation, with economic activity severely affected by the global spread of COVID-19 and the economy remaining sluggish. Although signs of a temporary recovery emerged as economic activity resumed in Japan and overseas and the government and local authorities introduced measures to stimulate consumption, the economy did not recover as a result of the renewed spread of infections, described as a possible third wave. Private consumption remained sluggish, affected by the deterioration in the employment and income environment and by caution and the mood to refrain from going out accompanying the renewed spread of infections.」

「Private consumption was expected to recover following the lifting of the state of emergency, but consumer sentiment remains sluggish amid the subsequent resurgence in infections. With no clear prospect for when the COVID-19 pandemic will end, concerns remain that the economic downturn will be prolonged, leading to deterioration in the employment and income environment and a corresponding stagnation in consumption.」

「Private consumption fell sharply as nationwide requests to refrain from going out under the state of emergency forced businesses, particularly those requiring in-store operations, to close temporarily. Going forward, concerns remain over the prolonged impact on economic and consumption activity of the deterioration in the employment and income environment and the decline in consumer sentiment caused by the spread of COVID-19.」

「Private consumption had remained firm as the employment and income environment improved against a backdrop of labor shortages, but growth subsequently stalled due to the consumption tax increase in October last year and a decline in winter-related consumption caused by the unusually warm winter.」

「Private consumption was somewhat weaker despite continued favorable employment and income conditions. Although there was some rush demand ahead of the consumption tax increase in October last year, the subsequent decline following that demand and sluggish consumer sentiment weighed on consumption. Going forward, the economic outlook is expected to remain uncertain due to concerns over the impact on Japan’s economy, particularly the export sector, from uncertainty in the global economy and the US-China trade friction, as well as concerns over the long-term impact of the consumption tax increase on consumption.」

「Private consumption remained on a recovery trend as favorable employment and income conditions continued amid tight labor supply and demand. Overall consumption was firm, supported in part by rush demand for durable goods ahead of the consumption tax increase in October. Going forward, the economic outlook remains uncertain due to uncertainty in the global economy, the US-China trade friction and movements in foreign exchange rates, as well as the impact on Japan’s economy, particularly the export sector, and the consumption tax increase planned for October this year.」

「Private consumption maintained a recovery trend as the employment and income environment continued to improve amid tight labor supply and demand, but consumer sentiment became cautious due to uncertainty over the outlook. Going forward, the economic outlook remains uncertain due to the impact on Japan’s economy, particularly the export sector, from the US-China trade friction, as well as the planned consumption tax rate increase in October this year.」

「Personal consumption maintained its recovery trend as employment and income conditions continued to improve. Meanwhile, overseas economies are expected to slow due in part to the effects of the US-China trade war, raising concerns about the impact on Japan’s economy, particularly in the export sector.」

「Although employment and income conditions continued to improve against a backdrop of labor shortages, consumer sentiment lacked strength due to factors including natural disasters and higher energy prices. In addition, intensifying trade friction in some overseas markets remained a risk factor for Japan’s economy.」

「During the cumulative first quarter, Japan’s economy remained on a recovery trend, and corporate earnings were solid as profitability continued to improve. Personal consumption also continued to recover as employment and income conditions improved against a backdrop of labor shortages.」

「Personal consumption also recovered gradually as employment and income conditions continued to improve, and consumer sentiment recovered. However, income growth remained slow and had not led to a full-scale expansion in consumption. In addition, prices were trending upward, raising concerns that consumption could be pressured going forward.」

「Personal consumption recovered as employment and income conditions continued to improve, but it remained weak because wage growth was slow and for other reasons.」

「Although employment and income conditions continued to improve, disposable income lacked strength because wage growth remained sluggish. The outlook for economic conditions also remained uncertain because of uncertainty in overseas economies and other factors.」

「Personal consumption has remained sluggish for an extended period because of lackluster growth in disposable income. Overseas, uncertainty about the outlook has increased because of the UK’s withdrawal from the EU, China’s slowing economy, and the policies of the new US administration that took office in January.」

「During the nine months ended [the relevant period], Japan’s economy showed signs of a gradual recovery amid steady corporate earnings and continued improvement in employment and income conditions. However, personal consumption remained sluggish, while uncertainty in overseas political and economic conditions increased because of the UK’s withdrawal from the EU, China’s slowing economy, and the economic policies of the new US administration that took office in January, leaving the outlook uncertain.」

「In the second half of the year, the outlook remained uncertain because of heightened uncertainty in the global economy, including the United Kingdom’s withdrawal from the EU and slower economic growth in China, as well as the yen’s appreciation.」

「Against a backdrop of the stronger yen and falling share prices since the beginning of the year, together with weak domestic and external demand, sentiment among companies and households lacked strength. In particular, the decision to postpone the planned consumption tax increase appears to have been based on the judgment that the global economy is facing risks and that raising the tax could undermine domestic demand, suggesting that sluggish personal consumption has persisted. There are also concerns that worsening public finances resulting from the postponement of the consumption tax increase, together with higher social security burdens, could heighten consumers’ concerns about the future and further weaken consumer sentiment.」