Commodity Tax and Royalty Uncertainty

Jakarta is still refining windfall tax, export duty, and royalty options for coal and nickel as it seeks extra fiscal revenue. The delay reduces immediate shock, but ongoing policy uncertainty complicates investment planning, contract pricing, and long-term capital allocation in extractives.

Drone Attacks Disrupt Export Infrastructure

Ukrainian strikes on Novorossiysk, Primorsk, Ust-Luga, refineries and related assets are disrupting core export routes. Novorossiysk normally handles roughly 25-35% of crude exports, while April output reportedly fell 300,000-400,000 bpd, increasing logistics uncertainty and force majeure risk.

Infrastructure, Energy and Water Gaps

Public and private investment plans are expanding ports, roads, airports and industrial hubs, but infrastructure readiness still trails demand. Energy reliability and water scarcity are especially important for manufacturers, with some new projects requiring electricity loads far above existing local capacity.

Strategic Landbridge Logistics Push

Thailand is accelerating its southern landbridge linking Indian and Pacific Ocean ports, a project valued at up to 1 trillion baht. Officials say it could cut shipping times by four days and costs by 15%, potentially reshaping regional supply chains and logistics investment decisions.

Industrial Overcapacity Trade Frictions

Beijing’s growth model still favors industrial upgrading and export reliance, deepening concerns over overcapacity in sectors such as EVs, batteries, and clean technology. This raises anti-dumping, tariff, and subsidy-response risks across major markets, pressuring investment returns and export-oriented production planning.

FDI Surge Into High-Tech

Registered FDI reached about US$15.2 billion in Q1 2026, up 42.9% year on year, while disbursed capital hit US$5.41 billion. Investment is shifting toward semiconductors, AI, data centres and greener manufacturing, reinforcing Vietnam’s role in supply-chain diversification and higher-value production.

Foreign investment rules improve

Saudi Arabia’s 2025 Investment Law allows full foreign ownership and strengthens investor protections, supporting capital inflows despite regional turbulence. Incentives including tax exemptions, fee reductions, and easier capital flows improve entry conditions for multinationals in selected sectors.

Selective but Slower Investment Momentum

First-quarter 2026 investment is forecast at Rp497 trillion, up 6.9% year on year, with downstream sectors still attracting capital from China, Japan, and South Korea. Yet weaker business expectations and geopolitical risk point to more selective, slower foreign direct investment decisions.

US Becomes Top Trade Partner

The United States overtook China and Hong Kong as Taiwan’s largest trading partner in the first quarter, US$78.25 billion versus US$73.80 billion. This shift supports friend-shoring but heightens business sensitivity to US policy, tariffs, export controls, and bilateral negotiations.

Macroeconomic Reform and IMF

Egypt’s IMF-backed reform programme remains central to currency stability, sovereign financing, and investor confidence, with up to $3.3 billion in further disbursements linked to reviews this year. Businesses should expect continued policy tightening, subsidy reform, and regulatory adjustment.

Sanctions Volatility Reshapes War Economics

Shifting U.S. and EU sanctions policy on Russian oil affects Ukraine indirectly by influencing Moscow’s revenues, energy prices, and the wider risk environment. Kyiv says over 110 shadow-fleet tankers carry about 12 million tonnes worth $10 billion, underscoring geopolitical exposure for traders.

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.

Strategic Semiconductor Industrial Push

Tokyo approved an additional ¥631.5 billion for Rapidus, lifting government R&D support to about ¥2.35 trillion, with total support expected near ¥2.6 trillion. The push to localize 2nm chip production by 2027 could reshape electronics, automotive, and AI supply chains.

Automotive Policy and China Pressure

Germany is pushing in Brussels for softer post-2035 vehicle rules, including greater flexibility for e-fuels and plug-in hybrids, to protect its auto base. The debate reflects mounting pressure from more competitive Chinese producers across EVs, machinery and supplier chains.

EV Battery Supply Chains Shift

Japan is strengthening incentives for domestic and Japan-linked battery supply chains while expanding EV subsidies by 400,000 yen to a maximum of 1.3 million yen. This favors localized sourcing, opens opportunities for allied suppliers, and reduces dependence on China-centered inputs.

Electronics Supply Chain Deepening

India’s electronics sector is moving beyond assembly into component exports and semiconductor manufacturing, supported by PLI, ECMS and SEZ reforms. TATA’s ₹91,000 crore fab and rising Apple-linked exports signal stronger localisation, higher value addition and new supplier opportunities.

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.

Pharma pricing and resilience concerns

France continues to push medicine affordability, but low generic penetration at 44% versus 84% in Germany highlights structural inefficiencies. Ongoing price pressure and regulation may challenge pharmaceutical margins, while resilience and domestic supply security remain strategic policy concerns.

Tax Reform Implementation Risks

Brazil began transitioning to its new dual VAT in 2026, replacing five indirect taxes through 2033. Pending IBS/CBS regulation, estimated combined rates near 26.5%, and system adaptation requirements create significant compliance, pricing, contracting, and ERP risks for multinationals.

China-Taiwan Security Spillover Risk

Japan’s trade with China is around $300 billion, yet tensions over Taiwan and the Senkakus are rising. Any escalation would threaten semiconductor flows, shipping routes and investor confidence, forcing companies to reassess concentration risk and business continuity planning.

Tighter North American Content Rules

US negotiators are pushing stricter rules of origin, including proposals for 100% regional sourcing in key auto components, above the current roughly 75% threshold. Companies may need supplier reshoring, higher compliance spending, and redesigned procurement strategies across Mexico operations.

Oil dependence still shapes risk

Despite diversification efforts, oil remains central to fiscal stability and external balances. Analysts cited oil above $100 per barrel as important for budget equilibrium, meaning hydrocarbon price swings will continue to influence public spending, payment cycles, and the pace of business opportunities across sectors.

Political Stability with Legal Overhang

The new Anutin-led coalition offers more continuity than recent Thai governments, which may support investment planning. However, a Constitutional Court review of election ballot design still creates institutional uncertainty, reminding businesses that judicial intervention remains a live political risk.

Tax Base Expansion Pressure

The upcoming budget is expected to widen taxation across agriculture, retail, real estate, IT and exporters. With tax collection at Rs11.735 trillion still below the Rs12.3 trillion target, companies should expect stronger enforcement, audit centralisation and heavier compliance obligations.

EU Fiscal and Energy Constraints

Brussels is urging member states to keep fuel support limited and temporary, reducing France’s room for broad market intervention. For businesses, this means continued exposure to energy-cost swings, tighter fiscal discipline, and a policy environment increasingly shaped by EU budget and competition rules.

China De-risking Reshapes Supply Chains

US imports from China fell further in March, down 6.7% year on year, while sourcing from Vietnam, Thailand and other Asian suppliers expanded. Companies should expect continued supplier diversification, trade reconfiguration, and uneven sector exposure across electronics, machinery, and consumer goods.

War-Driven Oil Price Leverage

Conflict has increased Iran’s oil revenues even as wider Gulf exporters face disruption. Reports indicate daily revenues nearly doubled as Brent-linked prices surged and discounts to Chinese buyers narrowed from $18-24 per barrel to about $7-12, amplifying energy market volatility for importers.

Sanctions Evasion Oil Dependence

Despite sanctions and conflict, Iran is exporting an estimated 2.4-2.8 million barrels per day, with China absorbing over 90%. This entrenches opaque shipping, ship-to-ship transfers, and dark-fleet activity, increasing compliance, due-diligence, and reputational risks for traders, refiners, insurers, and financiers.

Labor Costs and Regulatory Volatility

Employers report 67% of firms do not plan new hiring and 50% lack five-year expansion plans, citing global uncertainty and repeated labor-rule changes. High severance and unit labor costs versus Vietnam and Cambodia risk diverting labor-intensive manufacturing and supply-chain relocation.

US Trade Pact Recalibration

India-US trade talks have reset after Washington imposed a temporary 10% tariff on all countries, eroding India’s earlier advantage. Ongoing Section 301 probes add compliance risk, making tariff outcomes and market-access terms critical for exporters, sourcing strategies, and investment planning.

Labor shortages and cost pressures

An ageing workforce and structurally tighter labor supply are raising business costs and limiting Germany’s recovery capacity. Industry groups are pressing for lower non-wage labor costs, higher participation by older workers and women, and more labor-market flexibility to sustain investment and operations.

Budget Law and Tax Friction

Implementation of the 2026 budget has been delayed after parliament referred amendments to the Council of State. Contested provisions include higher fuel and gas excise duties and capped indexation, creating near-term uncertainty for labour costs, consumer demand, and operating expenses.

Empowerment Rules Shape Market Entry

B-BBEE requirements remain a major determinant of foreign investment structures, especially in ICT and mining. South Africa is reviewing equity-equivalent pathways for multinationals, while mining-right renewals may require at least 26% black ownership, increasing structuring, compliance and political sensitivity for investors.

Renewables and Hydrogen Expansion

Egypt is accelerating renewable and hydrogen projects to reduce fuel imports and build export capacity. New solar, storage, and green hydrogen investments, including a 500 MW Alexandria study, support supply resilience, industrial decarbonization, and long-term opportunities in energy-intensive manufacturing.

Highway Insecurity Disrupts Logistics

Cargo theft, extortion and transport protests are disrupting freight corridors across Mexico. Officially, 6,263 cargo robbery investigations were opened in 2025, while industry estimates exceed 16,000 incidents annually, raising insurance costs, transit delays, spoilage risks and cross-border supply chain vulnerability.

Red Sea and Hormuz disruptions

Conflict-linked threats to the Strait of Hormuz and Bab al-Mandab are raising freight, fuel and insurance costs for Israel-linked trade flows. Shipping rerouting can add roughly 10 days and about $1 million per voyage, disrupting delivery schedules.