Supply-chain depth and localisation

Vietnam remains attractive for China-plus-one strategies, but domestic supplier depth is still limited. FDI companies generate about 73% of exports, while domestic value-added in manufacturing is only 12% versus the ASEAN average of 33%, constraining resilience, sourcing flexibility and local content expansion.

Nickel Supply Chain Input Stress

Indonesia’s nickel processing chain faces additional pressure from sulfur shortages and surging import costs tied to Middle East disruptions. Sulfur import dependence and reported Q1 import declines of 30% year on year risk production cuts at HPAL facilities, tightening battery material supply.

Tariffs disrupt industrial competitiveness

U.S. Section 232 and Section 301 actions remain a major threat to Mexican exports, notably steel, aluminum, autos and parts. Existing 50% steel tariffs and potential new measures risk raising costs, distorting integrated supply chains, and undermining cross-border manufacturing economics.

Trade Strategy Shifts Toward FTAs

Officials are increasingly linking industrial policy to trade agreements with partners including the UK, EU, Australia and EFTA. Greater tariff predictability and regulatory harmonisation could improve investment confidence, though businesses still face uneven implementation and import competition under lower-duty regimes.

Inflation, Fuel Costs, Currency Exposure

External commodity shocks are lifting transport and input costs despite South Africa’s relatively contained inflation. Government extended temporary fuel tax relief worth about R17.2 billion, but reliance on imported refined petroleum leaves firms exposed to oil volatility, freight inflation and rand-sensitive pricing.

Infrastructure and Planning Reform Push

Ministers are moving to shield major infrastructure projects from broader court challenges, aiming to accelerate delivery. Faster approvals would support energy, transport and industrial investment, though implementation risk remains important for developers assessing timelines, legal exposure and capital deployment decisions.

Cybersecurity compliance pressure rising

France recorded 6,167 data-breach notifications in 2025, up 9.5% year on year, with hacking behind roughly half. The CNIL plans tougher inspections and sanctions in 2026, increasing compliance, vendor-management and operational-resilience demands for firms handling large datasets.

Weak domestic demand and retail softness

French household confidence remains subdued as inflation and fuel prices rise. Clothing store sales fell 3.1% year on year in April, marking an eighth consecutive monthly decline, highlighting softer consumer demand that may weigh on discretionary sectors, inventory planning, and market-entry strategies.

Nuclear Dispute Drives Risk Premium

Iran’s unresolved nuclear file remains central to sanctions, diplomacy, and military escalation risk. With around 972 pounds of uranium enriched to 60% cited in reporting, uncertainty over enrichment and stockpile disposal sustains geopolitical risk premiums affecting investment timing, insurance, and regional exposure decisions.

Major Gas Projects Await Approval

Large-scale developments such as Woodside’s Browse project highlight Australia’s investment potential in gas, with estimated A$48.7 billion project spending and significant fiscal returns. Yet prolonged environmental reviews and policy uncertainty continue to shape timelines, financing assumptions and supplier commitments.

Reconstruction Investment Needs Security

Ukraine’s reconstruction opportunity remains vast, but private capital deployment is constrained by security uncertainty, institutional gaps, and corruption risks. Investors are watching for clearer governance frameworks, stronger guarantees, and credible EU accession milestones before committing at scale.

Digital compliance rules tighten

New decrees expanded obligations for digital platforms operating in Brazil, requiring faster removal of criminal content and stronger advertising traceability, under ANPD oversight. The changes increase compliance demands, legal exposure and operational adaptation costs for foreign technology, media and online marketplace firms.

Inseguridad logística en corredores

El auge exportador ha elevado la exposición a robo de carga, retrasos fronterizos, problemas aduanales y daños a mercancías. Estos riesgos encarecen seguros, inventarios y cumplimiento contractual, especialmente en corredores hacia Estados Unidos y polos industriales del norte.

External Shipping Routes Increase Risk

Vessel diversions around the Cape of Good Hope are adding roughly 10 to 14 days to transit times and increasing fuel, insurance and surcharge costs. South Africa gains traffic, but importers and exporters face congestion, inventory risk and schedule volatility.

Power Reliability Becomes Critical

Authorities are preparing for 2026 dry-season electricity shortages as demand could rise 8.5% in the base case and 14.1% in stress scenarios. Power reliability now directly affects factories, industrial parks, data centres and high-tech investors evaluating Vietnam’s operating resilience.

Infrastructure and New Capital Continuity

Authorities insist Nusantara capital development is continuing via state budget, private investment and PPP schemes, alongside broader logistics and service buildout in East Kalimantan. For investors, this sustains construction and infrastructure opportunities, though funding execution and policy continuity still require monitoring.

Border Security Technology Expansion

India plans a technology-driven smart border along Pakistan and Bangladesh using drones, radars, sensors and real-time monitoring. This should strengthen security in vulnerable corridors, but can also tighten checks, alter border-area trade flows and raise compliance demands for logistics operators.

Energy Import Exposure Intensifies

Egypt raised its FY2026/27 fuel import budget to $5.5 billion, up 37.5%, reflecting vulnerability to regional energy shocks. Higher diesel, LPG, and gasoline costs increase inflation, pressure foreign-exchange needs, and raise production, logistics, and utility expenses for trade-exposed businesses.

Tourism Weakness and Rules

Tourism, a major economic pillar, is losing momentum as arrivals fell 3.43% year on year through May 10 and some operators reported 6-7% revenue declines. Proposed cuts to visa-free stays from 60 to 30 days may further affect hospitality, retail and service-sector demand.

Export competitiveness under pressure

Turkish exporters report eroding competitiveness as domestic inflation outpaces currency depreciation. March exports fell 6.4% year on year while imports rose 8.2%, with textiles, apparel, and leather especially exposed. Foreign firms sourcing from Turkey face mixed prospects on pricing versus financial stability.

Trade diversification toward Europe

Mexico’s modernized agreement with the European Union improves market diversification as nearly all bilateral tariffs are set to be removed, 86% of agricultural products gain immediate opening, and updated digital, investment, and compliance rules create new export and financing opportunities.

Trade corridors and logistics rerouting

Disruption in the Gulf and Strait of Hormuz is accelerating Turkey’s role in alternative routes via Iraq, Saudi Arabia, Jordan, the Development Road and the Middle Corridor. This strengthens Turkey’s logistics value, but also creates operational volatility in transit times and routing costs.

Ceasefire Talks and Policy Uncertainty

Tentative US-Iran negotiations could reopen ports, relax some sanctions, and restore oil exports, but approval remains uncertain and terms may collapse. Businesses face a highly unstable policy environment where market access, payments, logistics permissions, and energy costs could change rapidly.

Strait of Hormuz Shipping Risk

Iran’s leverage over the Strait of Hormuz continues to disrupt a corridor that normally carries about one-fifth of global oil and LNG trade. Restricted transit, mine-clearing uncertainty, and possible permit or fee systems raise freight, insurance, and supply-chain continuity risks.

Reconstruction Access Remains Blocked

Gaza reconstruction is stalled by deadlock over Hamas disarmament, despite estimates that rebuilding needs reach $71.4 billion over ten years. Restricted aid flows, delayed border access, and unresolved governance arrangements limit opportunities in construction, transport, services, and donor-backed commercial participation.

Reconstruction Pipeline Lacks Clarity

Ukraine’s recovery potential remains significant, but investors still face uncertainty over security guarantees, donor coordination and the institutional framework for managing future reconstruction funds. Until governance, funding architecture and risk-sharing mechanisms are clearer, large-scale private capital will remain cautious and highly selective.

Rare Earth Supply Chain Leverage

China still refines over 90% of global rare earths and heavy rare earth exports remain about 50% below pre-restriction levels. Dysprosium and terbium prices have surged, disrupting automotive, aerospace, semiconductor, and clean energy supply chains worldwide.

Foreign Business Retaliation Rules

Beijing’s new countermeasures framework gives authorities broader scope to respond to foreign sanctions and supply-chain diversification moves. Multinationals face rising legal and operational complexity, especially where compliance with Western rules could conflict with Chinese directives or trigger investigations.

Semiconductor Controls and China Exposure

Japan faces growing exposure to tighter semiconductor export controls as the proposed U.S. MATCH Act could force alignment within 150 days, affecting firms such as Tokyo Electron. Escalating U.S.-China technology restrictions may cut China revenues, complicate servicing, and reshape regional investment decisions.

Port Incentives Support Transit Trade

Mawani extended a 15-day storage-fee exemption for transit cargo at Dammam, Yanbu Commercial, Yanbu Industrial, and NEOM ports. The measure strengthens Saudi port competitiveness, supports trade flow diversification, and offers shippers incremental cost savings on selected non-container cargo.

China Exposure and De-risking

Germany’s China relationship remains commercially vital, with bilateral trade around €250 billion in 2025, yet exports reportedly fell about 10% while imports rose. Businesses face tougher scrutiny, critical-minerals dependency risks, and pressure to diversify supply chains and market exposure.

Export Earnings Liquidity Restrictions

Planned natural-resource export earnings rules would require firms to retain 50% of proceeds domestically for one year from June. Exporters warn this could tighten working capital, reduce financial flexibility, and complicate treasury management for commodity producers and cross-border supply chains.

Slowing Growth High Rates

Russia’s Economy Ministry cut its 2026 growth forecast to 0.4%, while inflation was revised to 5.2% and the 4% target delayed to 2027. Tight monetary policy, weak corporate finances, and low investment attractiveness are worsening financing conditions for businesses.

Deindustrialization and Investment Outflow

Business groups warn Germany’s industrial base is losing ground as investment increasingly shifts abroad. High energy costs, bureaucracy, slow permitting, and weak domestic confidence are driving relocations, plant rationalization, and foreign acquisition interest, weakening Germany’s role in European manufacturing networks.

Semiconductor Expansion and AI Capex

Japan’s semiconductor ecosystem is benefiting from AI-driven global capital expenditure, supporting stronger demand for chips, testing equipment, and production tools. Capacity expansion by firms such as Renesas, Advantest, and Tokyo Electron strengthens Japan’s role in strategic technology supply chains.

State Intervention in Strategic Industries

Berlin is taking a more activist industrial posture, including a planned 40% stake in defense group KNDS, valued around €18-20 billion. International businesses should expect greater state influence over strategic sectors, technology retention, ownership structures, and cross-border deal approvals.