Critical Minerals Investment Surge

Brazil is attracting substantial foreign investment in critical minerals, including rare earths, graphite, and nickel. Strategic partnerships with the US and EU are developing, positioning Brazil as a key supplier for clean energy and technology supply chains, and diversifying away from China.

Surge in Used EV Market Drives Battery Reuse

France’s used electric vehicle market grew 30% in 2025, with battery longevity and second-life applications now critical. This trend boosts demand for battery reuse solutions, influencing investment strategies and the structure of aftersales and recycling supply chains.

Semiconductor Industry Expansion and Resilience

Massive investments, including TSMC’s Kumamoto project, are transforming Japan’s semiconductor sector, with 6.2 trillion yen projected by 2030. This shift, driven by AI demand and 'de-China' strategies, positions Japan as a key global hub, attracting supply chain partners and foreign capital.

Immigration tightening strains labour

Visa and sponsor-licence enforcement is intensifying, with policy moving to end care-worker visas by 2028 and continued restrictions on overseas recruitment. Sectors reliant on migrant labour face staffing risk, wage pressure, and service disruption, pushing automation, outsourcing, and location strategy reviews.

Foreign Investment Scrutiny Intensifies

Australian authorities are tightening scrutiny of foreign investment, especially in strategic sectors like rare earths. Recent government actions to force divestment of Chinese-linked stakes in Northern Minerals reflect heightened national interest concerns, affecting deal certainty for international investors.

Strategic Role in National Security Policy

The bomb shelter mandate is part of Poland’s broader civil defense modernization in response to regional threats. This positions the sector as strategically important, attracting interest from defense-oriented investors and suppliers, but also linking it to evolving geopolitical risk.

Regulatory and Political Volatility

Frequent regulatory changes—including environmental rollbacks, immigration crackdowns, and shifts in tax enforcement—are heightening operational risks for international businesses. The Trump administration’s aggressive use of executive power and unpredictable policy reversals are forcing companies to build greater flexibility and contingency into their US strategies, impacting investment timelines and compliance costs.

Immigration and visa policy uncertainty

Shifting U.S. visa rules and politicized immigration enforcement complicate global talent mobility. Employers may face higher costs, slower processing, and tighter eligibility for H-1B and other work visas, constraining staffing for high-skill operations, construction, and tech-enabled supply chains.

Critical Minerals and Rare Earths Competition

Ukraine’s vast lithium and rare earth reserves are drawing major foreign investments, including a $700 million lithium project. Control over these resources is a strategic priority for both Ukraine and Russia, with global implications for energy transition and technology supply chains.

Transactional deal-making with allies

Washington is increasingly using tariff threats to extract investment and market-access commitments from partners, affecting sectors like autos, pharma, and lumber. Businesses should anticipate rapid policy shifts tied to negotiations, with material implications for location decisions, sourcing, and pricing in key allied markets.

EU Customs Union modernization momentum

Turkey and the EU agreed to keep working toward modernizing the 1995 Customs Union, with business pushing to expand it to services, digital and procurement. Progress could reduce friction for integrated value chains, but talks remain conditional on rule-of-law and climate alignment.

VAT and Regulatory Changes in Energy

France will raise VAT on energy subscriptions from 5.5% to 20% in August 2026 to comply with EU rules. This tax hike, alongside evolving energy regulations, will affect operating costs, consumer demand, and investment decisions in the energy and industrial sectors.

USMCA review and tariff risk

The 2026 USMCA/CUSMA joint review is approaching amid fresh U.S. tariff threats (up to 100% on Canadian goods) and active duties on steel, aluminum, autos and lumber. Uncertainty raises cross-border pricing, rules-of-origin, and investment risk for integrated supply chains.

Stable Growth and Investment Climate

President Prabowo projects economic growth above 5% with low inflation, driven by industrialization and the new sovereign wealth fund Danantara. The government is rationalizing state-owned enterprises and courting foreign investors, enhancing Indonesia’s appeal as a stable investment destination.

Escalating Cross-Strait Geopolitical Risks

China’s increased military pressure, including frequent air and naval incursions, raises the risk of conflict and supply chain disruption. Heightened tensions threaten business continuity, insurance costs, and regional stability, making contingency planning essential for international firms.

Syria Policy and Regional Security Risks

Turkey’s evolving Syria strategy, focused on eliminating YPG/PKK influence and supporting Syrian state control, aims to stabilize its southern border. While this may improve regional security and trade, ongoing tensions and humanitarian concerns pose risks for cross-border operations and investor confidence.

Privatization and PPP Expansion

Saudi Arabia’s new National Privatization Strategy targets over 220 PPP contracts and $64 billion in private investment by 2030. This broadens opportunities for foreign investors in infrastructure, transport, water, and health, while increasing private sector participation and competition.

Labor Reforms and Compliance Pressure

Recent labor reforms include a 13% minimum wage hike, stricter workplace inspections, and recognition of app-based couriers as employees. Upcoming changes, such as a proposed 40-hour workweek and enhanced whistleblowing, increase compliance costs and operational complexity for international employers.

Workforce constraints and labour standards

Tight labour markets, wage pressures, and scrutiny of recruitment and labour practices increase compliance and cost risks. Manufacturers and infrastructure developers may face higher ESG due diligence expectations, contractor oversight needs, and potential reputational exposure in supply chains.

SME Funding Gap and Investment Selectivity

Despite renewed investor confidence, South Africa’s SME sector faces a R350 billion funding gap due to strict financial controls and governance requirements. Only well-structured businesses attract capital, limiting broad-based economic growth and job creation.

EU-Mercosur Deal Sparks Unrest

France’s opposition to the EU-Mercosur trade agreement, driven by farmer protests and political divisions, delays ratification and threatens supply chain stability. The deal’s fate will shape market access, regulatory risks, and strategic raw materials sourcing for years.

Macroeconomic Reform and Investment Climate

Egypt’s government is accelerating macroeconomic reforms, including privatization, infrastructure upgrades, and digitalization. These measures, highlighted at Davos 2026, aim to attract long-term foreign investment, but sustained policy execution and regulatory clarity remain critical for investor confidence.

Supply Chain Realignment and China-Plus-One

Rising geopolitical tensions and global supply chain disruptions have accelerated India’s emergence as a preferred alternative to China. Multinationals are increasingly adopting a 'China-Plus-One' strategy, leveraging India’s scale, skilled workforce, and improving infrastructure for diversification and risk mitigation.

Rate-cut uncertainty, sticky inflation

With CPI around 3.4% and the Bank of England cautious, timing and depth of rate cuts remain contested. Volatile borrowing costs affect capex decisions, leveraged buyouts, real estate financing, FX expectations and consumer demand, complicating pricing and hedging strategies.

Trade Policy Uncertainty and FTA Utilization

Ongoing trade negotiations, particularly with the US and India, create uncertainty for exporters. Only 54% of eligible Thai exporters use FTA benefits, prompting government efforts to streamline certification, diversify markets, and expand mutual recognition agreements to enhance trade resilience.

Integration with Renewable Energy and Grid Storage

Second-life EV batteries are increasingly deployed in grid-scale energy storage, supporting France’s renewable energy transition. This integration creates new business opportunities, enhances grid resilience, and drives cross-sector investment in energy and mobility.

Political-Military Influence on Policy

Military leadership’s direct involvement in economic negotiations and investment decisions signals institutional fragility. This dynamic introduces unpredictability in regulatory enforcement and business climate, impacting long-term planning and foreign investor confidence.

Election, coalition, constitutional rewrite

February 2026 election and constitutional referendum (about 60% “yes”) reshape Thailand’s policy trajectory. Coalition bargaining and court oversight risks can delay budgets, permits, and reforms, affecting investor confidence, PPP timelines, and regulatory predictability for foreign operators.

BoJ tightening, yen volatility

The Bank of Japan’s post-deflation normalisation (policy rate at 0.75% after December hike) keeps FX and JGB yields volatile, raising hedging costs and repricing M&A and project finance. Authorities also signal readiness to curb disorderly yen moves.

EV overcapacity and trade defenses

China’s EV, battery, and solar sectors face margin pressure from domestic overcapacity alongside expanding foreign trade defenses (anti-subsidy probes, local-content rules). Exporters and investors should expect higher tariffs, forced supply-chain restructuring, and increased scrutiny of subsidies and pricing.

Surge in Foreign Direct Investment

Egypt attracted $12.2 billion in foreign investment in 2025, a 20% increase, reflecting improved investor confidence and economic reforms. The government targets further growth, aiming for $145 billion in exports by 2030 and robust annual export growth.

Suez Canal Disruptions and Recovery

The Gaza conflict and Red Sea security threats caused Egypt to lose $9 billion in Suez Canal revenue over two years, severely impacting global supply chains and Egypt’s foreign exchange. Gradual resumption of shipping is underway, but risks remain.

Environmental and Labor Standards Scrutiny

Foreign investment, particularly from China, faces increasing scrutiny over environmental and labor practices. Regulatory enforcement and community expectations are rising, making compliance with sustainability standards essential for maintaining social license and business continuity.

Labor Market Reform and Demographic Challenges

Japan is revising pension rules in 2026 to encourage seniors to remain in the workforce, addressing acute labor shortages and an aging population. While male parental leave uptake is rising, progress on gender diversity in management remains slow, affecting long-term productivity and talent strategies.

Tariff Policy and China Trade Dynamics

Mexico’s export growth to the US persists despite tariff tensions, with effective rates around 3.5%—far lower than China’s 32%. Mexico’s alignment with US protectionist measures against China strengthens its position as America’s top trading partner, but exposes it to policy volatility.

Export Controls on AI Compute

Evolving Commerce/BIS restrictions on advanced AI chips and related technologies are tightening licensing, end‑use checks, and due diligence. Multinationals must segment products, manage re‑exports, and redesign cloud/AI deployments to avoid violations and sudden shipment holds in sensitive markets.