Tourism Recovery Turns Fragile

Tourism, about 12% of GDP, is weakening as fuel costs rise and Middle East disruption cuts arrivals. Visitor targets may fall from 35 million to 32 million, implying losses up to 150 billion baht and softer demand for hospitality, retail, transport, and real estate.

Trade Surplus Backlash Intensifies

China’s large merchandise surplus—reported near $1.2 trillion last year—is fueling foreign protectionism and scrutiny of Chinese manufacturing dominance. Businesses should expect more tariffs, investment screening, local-content rules and political pressure reshaping sourcing, market access and cross-border capital allocation.

Regional Conflict Supply Exposure

Conflict spillovers from Iran and wider Middle East instability threaten logistics, tourism, export demand and supplier continuity. Turkish officials estimate the shock could widen the current account deficit by around 1 percentage point and shave about 0.5 points off growth.

Energy Shock and Import Dependence

Thailand’s heavy reliance on imported crude and fertiliser is amplifying cost pressures across industry. Authorities estimate roughly three months of oil and one month of fertiliser reserves, while prolonged disruption could cut GDP growth to 1.3% or lower and raise inflation.

Tourism Growth Offsets Regional Volatility

Domestic tourism reached 28.9 million trips in Q1 2026, up 16%, with spending at SR34.7 billion. Strong religious and leisure demand supports hospitality, aviation, retail, and services, but regional tensions still threaten wider GCC travel flows and revenues.

Tariff Volatility and Legal Uncertainty

US trade policy remains highly unstable after the Supreme Court struck down 2025’s broad tariffs, yet new duties continue under alternative authorities. Frequent rate changes, pending refunds near $166 billion, and shifting exemptions complicate pricing, contracts, sourcing, and market-entry decisions.

Strategic Trade Diversification Push

Ottawa is accelerating diversification beyond the U.S., targeting a doubling of non-U.S. exports and expanding ties with Europe, Asia and China. This broadens market options, but also raises execution, compliance and geopolitical exposure for multinational firms.

Trade Corridors Rebalance Exports

Ukraine’s export resilience increasingly depends on diversified corridors, especially the Danube and Black Sea routes. Danube ports handled more than 8.9 million tons in 2025, reducing border pressure and preserving flows of metals, fertilizers, agricultural goods, fuel components, and reconstruction equipment.

Policy volatility in energy

Government intervention in fuel and refining policy is increasing uncertainty. Lula moved to annul a Petrobras LPG auction after prices jumped 100% and reiterated interest in repurchasing Mataripe refinery. This raises questions over price-setting, state influence, and investment predictability in Brazil’s energy value chain.

Nearshoring con cuellos logísticos

México sigue captando relocalización productiva, con IED récord y nuevas inversiones manufactureras, pero enfrenta límites operativos. Persisten cuellos de botella en energía, infraestructura y cruces fronterizos, aunque ambos gobiernos acordaron modernizar inspecciones y logística para reducir tiempos y mejorar competitividad.

Logistics Connectivity Upgrades Accelerate

Authorities are pushing port, corridor and logistics upgrades to attract higher-value trade and FDI. Ho Chi Minh City is pursuing direct U.S. shipping links, while central provinces promote deep-water ports, airports and border-gate connectivity to reduce transport costs and improve resilience.

Sanctions Volatility Reshapes Energy Trade

US waivers on Russian oil purchases have become a major variable for importers, especially India, while price-cap enforcement and secondary-sanctions risks remain fluid. This keeps crude and LNG trade highly opportunistic, complicating procurement, compliance, shipping insurance, and hedging decisions.

Business Planning Horizon Shortens

For many firms, policy uncertainty itself has become a structural operating condition. Companies are delaying capital projects, shortening procurement commitments, and building modular supply chains as court challenges, tariff refund disputes, and shifting executive actions reduce confidence in long-term U.S. trade and investment predictability.

Discounted LNG Seeks New Buyers

Russia is offering LNG from sanctioned Arctic LNG 2 and Portovaya at discounts of up to 40% to spot prices via intermediaries. Commercially attractive cargoes may appeal to price-sensitive Asian buyers, but sanctions, shipping scarcity, and retaliation fears constrain scalable market access.

Mining Export Recovery Uneven

Mining output rose 9.7% year on year in February and bulk exports increased 13.4% in the first quarter, signalling recovery. However, production remains 6.4% below 2019 levels, showing how logistics constraints and administered costs still limit commodity export upside.

Biosecurity and Market Access Controls

Australia continues to apply stringent agricultural and import standards, underscored by newly published conditions for Vietnamese pomelo access. For food, agribusiness and retail firms, strict quarantine compliance, certification and treatment rules remain central to supply-chain planning and export timing.

Lelepa Consent and ESG Risk

Royal Caribbean’s planned Lelepa private destination, expected to host up to 5,000 visitors daily by 2027, faces indigenous opposition over environmental review gaps and cultural heritage risks, raising permitting, reputational, financing, and partner due-diligence exposure for investors and operators.

AI Infrastructure Competitiveness Gap

OpenAI paused its Stargate UK data-centre project, citing high industrial electricity costs and unresolved AI copyright rules. The setback highlights risks to sovereign compute ambitions, cloud investment, and digital-sector competitiveness if energy pricing and regulatory clarity do not improve.

Judicial Reform and Rule-of-Law

Mexico’s judicial overhaul continues to unsettle investors as lawmakers themselves now seek stricter eligibility and vetting rules after concerns about inexperienced judges. Businesses increasingly cite rule-of-law weakness as a top obstacle, affecting contract enforcement, dispute resolution and long-term capital allocation.

China Ties and Dependency

Vietnam is deepening economic and infrastructure ties with China through rail, energy, logistics, and supply-chain cooperation, even as trade dependence and regulatory convergence raise strategic concerns. For investors, this creates opportunities in connectivity but also higher geopolitical, compliance, and transshipment-risk exposure.

Immigration Constraints on Talent

Tighter legal immigration rules, including a $100,000 H-1B application fee, are reducing high-skilled talent inflows. Multinationals may face higher labor costs, slower hiring, and relocation of talent pipelines toward Canada, Australia, and other markets with more predictable visa regimes.

Local Fiscal Stimulus Dependence

China’s Q1 2026 local bond issuance reached 3.1059 trillion yuan, up 9.3% year on year, with over 1 trillion yuan in new special bonds. Growth remains reliant on debt-backed infrastructure and industrial projects, supporting suppliers short term but worsening balance-sheet vulnerabilities.

Severe Macroeconomic Instability

Inflation is running near 50% officially, with some warnings of far higher wartime acceleration, while the rial has sharply depreciated. This undermines pricing, wage planning, procurement and demand forecasting, and raises counterparty, payroll and working-capital risks for any business exposure.

Digital Trade Regulatory Balancing

India is expanding digital trade through new agreements while preserving domestic data governance. The IT sector generates over $280 billion in revenue and $225 billion in exports, but the DPDP framework, localization rules in payments, and evolving cross-border data conditions affect technology operators.

Navigation and Tracking Degradation

Electronic interference, altered AIS signals, and politically managed routing are reducing maritime visibility around Iranian chokepoints. Poor tracking increases collision, misidentification, and enforcement risks, while making inventory planning, ETA forecasting, and cargo monitoring materially less reliable for international operators.

North American Trade Pact Uncertainty

The USMCA review is slipping beyond the July 1 checkpoint, with disputes over autos, steel, aluminum and Chinese investment raising the risk of prolonged uncertainty, delayed capital spending, and operational disruption across tightly integrated North American supply chains.

Corporate Governance Reform Acceleration

Regulators are preparing a summer revision of the Corporate Governance Code to push companies away from cash hoarding toward growth investment. With retained earnings around ¥640 trillion and large cash balances, reforms could unlock M&A, capex, shareholder actions and restructuring.

Household Debt Depresses Demand

Household debt reached 12.72 trillion baht, or 86.7% of GDP, as borrowing shifts toward daily consumption and bank lending contracts. Weak purchasing power, tighter credit, and rising reliance on informal finance will weigh on domestic sales and SME payment capacity.

Semiconductor Controls Tighten Globally

New bipartisan proposals would expand US export controls on chipmaking equipment to China, covering foreign suppliers and servicing restrictions. This raises compliance burdens for semiconductor, electronics, and industrial firms while reinforcing technology bifurcation across allied and Chinese supply chains.

Egypt as Transit Hub

Cairo is actively repositioning Egypt as a Europe-Gulf logistics bridge through the Damietta-Trieste-Safaga corridor and temporary customs exemptions at key ports. The framework can reduce delays and logistics costs, benefiting time-sensitive sectors and supply-chain diversification strategies.

Defence Spending Delays Distort Investment

Delays to the UK’s Defence Investment Plan and a reported £28 billion funding gap are creating procurement uncertainty for defence, aerospace and advanced technology suppliers. While spending is set to rise, unclear timing is already affecting order books and investment planning.

Black Sea Logistics Under Fire

Drone attacks on ports, storage sites, and maritime assets are raising freight costs, delaying sailings, and increasing war-risk premiums. This directly affects grain, metals, and bulk exports while forcing companies to diversify shipping routes, inventories, and insurance structures.

BOJ Tightening and Yen Risk

The Bank of Japan’s 0.75% policy rate may rise again by June or July as inflation stays near 2%, import prices rose 7.9% in March, and the yen hovers near 160 per dollar, driving hedging, funding and pricing risk.

Tax Reform and Compliance Expansion

Authorities are broadening the tax base through audits, digital enforcement, and possible revisions to withholding taxes and super tax. Formal-sector firms, foreign investors, and multinationals should expect heavier documentation requirements, tighter scrutiny, and evolving refund and compliance procedures in the coming fiscal cycle.

Chip Controls Tighten Again

Bipartisan momentum behind the MATCH Act points to stricter semiconductor export controls on China, including DUV lithography and servicing bans. This could reshape electronics supply chains, pressure allied suppliers, and deepen compliance burdens for global technology manufacturers.

Semiconductor Controls Tighten Globally

Washington is expanding technology restrictions on China through the proposed MATCH Act and allied coordination, targeting chipmaking equipment, servicing, and software. This raises compliance burdens for semiconductor, electronics, and industrial firms while increasing concentration risk around trusted manufacturing and export-control jurisdictions.