Persistent Energy and Power Constraints

South Africa continues to face chronic electricity shortages and grid instability, impacting industrial output and investor confidence. Despite some renewable energy progress, reliance on coal and delays in infrastructure upgrades create ongoing risks for manufacturing, mining, and supply chains.

Economic Reform and Investment Momentum

Recent reforms, improved energy reliability, and enhanced infrastructure have strengthened South Africa’s economic outlook. The country has exited the FATF grey list and received a credit rating upgrade, attracting renewed interest from global investors and supporting capital inflows.

Labor Market Reforms and Transparency

France is implementing EU directives on salary transparency to address gender pay gaps and workforce equity. New laws require disclosure of pay ranges and justification of disparities, impacting HR policies, compliance costs, and labor relations for domestic and international employers.

LNG Export Expansion and Energy Policy

US LNG export capacity is expanding, with new projects and regulatory filings, aiming to supply global markets and support allies’ energy security. This growth strengthens US influence in energy geopolitics but raises questions about domestic energy costs and environmental impacts.

US-China Trade and Tariff Policy

The US maintains high tariffs on Chinese goods, with ongoing trade tensions and periodic truce agreements. Recent deals have reduced some tariffs, but policy uncertainty remains high, impacting global supply chains and prompting businesses to diversify sourcing and production.

US Technology Controls and Export Policy

The US has tightened export controls on advanced technology, especially AI chips, while selectively easing restrictions for vetted commercial sales to China with tariffs. These evolving rules are reshaping global semiconductor supply chains, impacting tech sector competitiveness, and influencing strategic investment decisions in tech manufacturing.

Digital Economy and Financial Innovation

Thailand is advancing digital finance, with the SEC set to regulate crypto ETFs and futures, and hosting the 2026 IMF–World Bank Meetings. These moves aim to position Thailand as a regional financial hub, attracting fintech investment but also requiring compliance with evolving regulations.

US-EU Trade Tensions Escalate

The US has imposed new tariffs of up to 25% on German and European goods, citing geopolitical disputes. This has led to a sharp decline in German exports to the US, especially in automotive and steel, and threatens supply chain stability and investment planning.

Strategic Energy Dependency on US LNG

Germany’s rapid shift from Russian to US LNG has created a new energy dependency, with 96% of LNG imports now sourced from the US. This exposes German industry to US political leverage, price volatility, and long-term risks to energy sovereignty and cost competitiveness.

India’s Strategic Response to US Trade Pressure

India is recalibrating its economic strategy in response to US tariffs, focusing on boosting domestic manufacturing, attracting FDI, and diversifying export markets. The 2026 Union Budget emphasizes capital expenditure, fiscal discipline, and incentives for manufacturing to position India as a resilient, long-term investment destination.

Gold Reserves Offset Asset Freezes

Russia’s gold reserves rose by $216 billion since 2022, now making up 43% of its international reserves. This windfall has partly offset the impact of $300 billion in frozen Western assets, providing Moscow with financial resilience despite sanctions and isolation.

Fiscal Deficit and Tax Policy Changes

Russia’s budget deficit reached 2.6% of GDP in 2025, the highest since 2020, as energy revenues fell. The government raised VAT and other taxes to offset losses, increasing the fiscal burden on businesses and consumers and creating uncertainty for investors and multinational corporations.

Technology Sector Volatility and AI Investment

Major US tech firms are ramping up AI investments, but market performance is diverging due to supply chain disruptions and tariff uncertainty. Long-term AI adoption promises sectoral transformation, yet near-term volatility affects global tech partnerships and investment strategies.

Infrastructure Concessions Drive Investment Surge

A record wave of infrastructure concessions—50 auctions in 2023-2025—has attracted over R$229 billion in private investment, especially in ports, highways, and energy. This shift to private sector-led development is improving logistics but also exposes projects to regulatory, financial, and execution risks.

Shift Toward High-Value Industries

Thailand is accelerating reforms to attract foreign direct investment in high-tech, green infrastructure, and wellness tourism, moving away from traditional manufacturing. This strategic pivot aims to boost long-term competitiveness amid declining FDI and rising regional competition, especially from Vietnam and Indonesia.

Selective Human Rights Stance and Policy Risk

South Africa’s foreign policy inconsistencies—especially its selective approach to human rights and alliances with authoritarian regimes—raise reputational and policy risks. This undermines diplomatic credibility and could impact international partnerships, sanctions exposure, and investor confidence.

Foreign Investment Decline and Decoupling

Foreign direct investment in China fell 9.5% in 2025, with many investors shifting to emerging markets due to geopolitical tensions, economic slowdown, and concerns over regulatory unpredictability. This trend challenges China’s long-term growth and integration with global capital markets.

Geopolitical Alliances and Trade Policy Coordination

US trade and investment policies are increasingly intertwined with geopolitical alliances, as seen in evolving US-South Korea agreements and pressure on Indo-Pacific partners to align with US strategic interests. This affects market access, regulatory frameworks, and supply chain security for international businesses.

Federal Reserve Policy and Political Pressure

The Federal Reserve has paused rate cuts at 3.6%, balancing persistent inflation (2.8%) and labor market stagnation. Political pressure from President Trump to lower rates and ongoing investigations into Fed leadership have raised concerns about central bank independence. Market expectations for further cuts in 2026 are muted, with Fed credibility and leadership transitions under intense scrutiny—factors that directly impact capital flows, currency valuation, and investment strategies.

Regulatory Uncertainty and National Security

China’s regulatory environment has become more unpredictable, with heightened enforcement on national security, technology, and data. Foreign businesses face stricter compliance requirements, greater scrutiny, and potential exposure to sudden policy shifts, impacting investment and operational planning.

Tariff Policy Uncertainty and Inflation

Recent tariff hikes—averaging 18% and affecting a broad range of imports—have raised inflation by 1.3% and cost US households up to $2,100 annually. Legal challenges and pending Supreme Court decisions add uncertainty, complicating business planning and investment strategies.

Political Instability and Budget Deadlock

France faces persistent political fragmentation, with the 2026 budget forced through parliament using Article 49.3. This instability undermines policy predictability, complicates fiscal planning, and increases uncertainty for international investors and businesses operating in France.

Fiscal Expansion and Market Volatility

Japan’s aggressive fiscal stimulus and proposed suspension of the 8% food consumption tax have triggered bond market volatility and yen fluctuations. With debt-to-GDP exceeding 230%, concerns over fiscal sustainability and potential debt-servicing risks are affecting global investor sentiment and cross-border capital flows.

Strategic Trade Pact Engagements Expand

South Korea is actively seeking entry into the CPTPP and deepening trade ties with Japan and other partners. These efforts aim to secure market access, strengthen supply chain cooperation, and offset risks from bilateral tensions with major economies.

Infrastructure Investment and AI Integration

Massive US infrastructure investment is underway, increasingly integrating AI for project management and sustainability. However, regulatory shifts and fragmented standards pose execution risks, while competition over infrastructure data and standards shapes global influence and market access.

Labor Market and Talent Dynamics

Taiwan’s advanced manufacturing sector is experiencing labor shortages and competition for engineering talent, exacerbated by global expansion. Demographic trends and workforce development are critical factors for sustaining innovation and operational resilience.

Geopolitical Realignment and US Tensions

South Africa’s closer military and economic ties with China, Russia, and Iran, including recent BRICS naval exercises, have strained US relations. This risks new US tariffs—potentially up to 55%—on key exports, threatening supply chains, trade access, and investment certainty.

Foreign Competition and Trade Policy Risks

The rise of Chinese battery and EV manufacturers in Europe, combined with potential EU tariffs on imported batteries and hybrids, creates policy uncertainty. International businesses must monitor evolving trade barriers and adapt sourcing and investment strategies accordingly.

Major Infrastructure and Capital Relocation Push

Significant investments are flowing into Indonesia’s new capital, IKN, with new projects in commercial, culinary, and office sectors. This development signals increased investor confidence and aims to establish IKN as a new economic growth hub by 2028, influencing long-term investment strategies.

US Industrial Policy and Onshoring Wave

The US is leveraging trade deals and tariffs to attract unprecedented foreign investment, with over $5 trillion pledged by major partners for domestic manufacturing. This onshoring drive is reshaping global supply chains, especially in semiconductors and advanced manufacturing, but introduces new risks of retaliation, regulatory uncertainty, and supply chain fragmentation as partners hedge against US policy volatility.

Accelerating Industrialization and Downstreaming

Indonesia’s aggressive push for industrialization, especially in nickel and battery materials, is transforming its export profile and attracting global investment. However, replicating nickel’s success in other sectors like copper faces economic and operational challenges, impacting long-term investor strategies and resource sustainability.

EU Regulatory and Trade Policy Shifts

The EU is revising its regulatory and budgetary frameworks to boost competitiveness, innovation, and reduce strategic dependencies. Germany’s leadership in these negotiations will influence future market access, investment incentives, and the regulatory landscape for international businesses.

Foreign Direct Investment Decline

Foreign direct investment into China dropped 9.5% in 2025, reflecting investor caution amid regulatory scrutiny and geopolitical tensions. While some countries increased investments, the overall decline signals challenges for China’s business climate and global integration.

Drone Strikes Disrupt Supply Chains

Ukrainian drone and missile attacks on Russian refineries and infrastructure in 2025 caused a 25% drop in energy income and the lowest refinery deliveries since 2010. These disruptions threaten supply reliability and raise operational risks for businesses dependent on Russian energy.

Domestic Economic Policy and Inflation Management

Turkey’s central bank continues cautious monetary easing as inflation falls to 30.9% in late 2025, with targets of 16% for 2026. Policy predictability, declining inflation, and supportive infrastructure investments are expected to foster a more stable business environment, though volatility remains a concern.

Strategic Reset With China

Canada and China have entered a new era of economic partnership, marked by reduced tariffs on electric vehicles and canola, and expanded cooperation in energy, finance, and agriculture. This recalibration aims to diversify Canada’s trade and investment flows, reducing overdependence on the US market.