Labor Market and Federal Workforce Shifts

US job growth has slowed, with federal employment down 9% and manufacturing jobs declining. Policy uncertainty and tariffs have dampened hiring and investment, affecting consumer sentiment and business expansion plans, especially for international investors.

Escalating US-UK Trade Tensions

President Trump’s imposition of 10–25% tariffs on UK exports in response to the Greenland dispute has triggered a transatlantic trade crisis. The UK faces heightened supply chain costs, investment uncertainty, and potential recession risks, with the EU preparing significant retaliatory measures.

Mining Sector Emerges as Strategic Pillar

Saudi Arabia is investing $110 billion to develop its $2.5 trillion mineral reserves, including rare earths, gold, and copper. The Kingdom seeks to become a regional processing hub, partnering with US firms and reducing global supply chain dependence on China for critical minerals.

Retaliatory Tariffs and Trade War Risks

The EU is preparing a €93bn retaliatory tariff package and considering activating its ‘trade bazooka’ anti-coercion instrument. A tit-for-tat tariff spiral could significantly disrupt UK supply chains, raise costs, and depress cross-border investment, with global recession risks rising.

Agricultural Modernization and Trade Shift

Pakistan is rapidly modernizing its agriculture sector through Chinese technology and investment, aiming for export-led growth and higher yields. This transformation presents new opportunities for agribusiness and logistics, but also heightens dependency on Chinese expertise and market access.

Administrative Delays and Bureaucratic Risks

The rapid rollout of new shelter regulations has strained local planning offices, causing project approval delays. This increases operational risk for developers and international investors, with potential for missed deadlines and higher holding costs.

Surge in Foreign Direct Investment

FDI inflows to India rose 73% to $47 billion in 2025, driven by services and manufacturing. Sustaining this growth requires policy stability, targeted reforms, and improved ease of doing business, as global volatility and competition from Vietnam and Malaysia intensify.

EV and Battery Ecosystem Expansion

Indonesia is rapidly developing an integrated EV and battery ecosystem, attracting major foreign investment. Over $7 billion is being invested in battery supply chains, with EV-related investment reaching 15.5% of total FDI, positioning Indonesia as a regional hub.

Robust Foreign Investment Inflows

Brazil attracted record foreign direct investment in 2025, totaling €71.9 billion (3.41% of GDP), driven by strong stock market performance and diversified investor interest. Sustained inflows reinforce Brazil’s position as a key emerging market destination for global capital.

Tightened Customs and Free Zone Regulations

Thailand’s Customs Department is revising free zone duty-exemption rules, increasing per-item fines for false declarations, and deploying AI for faster cargo clearance. These changes aim to close loopholes, standardize enforcement, and improve compliance, affecting manufacturers and logistics providers.

Supply Chain Diversification and Resilience

India is actively diversifying supply chains, expanding trade ties with the UK, New Zealand, Oman, and EFTA, and reducing dependence on any single market. This strategy strengthens resilience against global disruptions, supports manufacturing, and ensures continued access to critical inputs and export markets.

Digital Economy and AI Transformation

India is rapidly scaling its digital economy, deploying over 38,000 GPUs and attracting $67.5 billion in AI and cloud investments from global leaders. AI adoption is projected to generate $1.7 trillion in value by 2035, transforming manufacturing, services, and supply chains.

Debt Crisis and Fiscal Pressures

Egypt faces acute fiscal stress, with external debt exceeding $161 billion and controversial proposals to swap strategic assets for debt relief. The military’s economic dominance and reluctance to release reserves hinder effective crisis management, while IMF-mandated reforms require reduced state and military roles in the economy.

Tech Sector Expansion Amid Global Demand

Israel’s technology sector, including AI and semiconductor equipment, is experiencing robust growth, attracting major investments like Nvidia’s new campus. This expansion strengthens Israel’s global tech leadership but also strains local infrastructure and raises competition for talent.

Escalating Australia-China Trade Tensions

Australia is considering tariffs and quotas on Chinese steel imports to protect domestic industry, risking renewed trade hostilities with China. Such measures could trigger retaliatory actions, impacting sectors reliant on Chinese markets and complicating bilateral investment flows.

Sluggish Growth and Structural Reform

Thailand’s GDP growth is projected at just 1.5–2.0% for 2026, the lowest in three years, driven by weak exports, currency appreciation, and political uncertainty. This stagnation is prompting urgent calls for structural reforms, impacting investment strategies and business confidence.

Tariff-Driven Supply Chain Reconfiguration

US tariffs have forced businesses to diversify supply chains, reduce inventory holdings, and reconfigure logistics networks. The shift from legacy mega-hubs to intermediate nodes and diversified ports is improving efficiency but increasing operational complexity and costs.

US-Canada Trade Tensions Escalate

The US has threatened 100% tariffs on Canadian exports if Canada deepens trade with China, creating significant uncertainty for supply chains, cross-border investment, and the upcoming USMCA renegotiation. This volatility directly impacts market access and business planning for international firms.

Intensified Korea-China Trade Negotiations

Ongoing negotiations to expand the Korea-China FTA to services and investment signal deepening economic ties. Progress in these talks could reshape market access, regulatory alignment, and investment flows, influencing regional supply chains and competitive positioning.

Remittances and External Account Volatility

Remittances remain a critical source of foreign exchange, recently surpassing $41 billion annually. However, Pakistan’s current account remains vulnerable to shifts in remittance flows, export performance, and import demand, creating volatility that affects currency stability and investment confidence.

Energy Transition and Russian Sanctions

Germany and nine North Sea states agreed to massively expand offshore wind capacity, aiming for energy independence from Russia by 2050. This strategic shift, reinforced by new EU sanctions on Russian gas, will reshape energy supply chains and create opportunities in renewable energy and related industries.

Agricultural and Resource Export Diversification

Australia continues to diversify export markets and products, leveraging new trade agreements and investments in minerals, agriculture, and technology. However, exposure to external shocks—such as Chinese trade actions or global commodity price swings—remains a significant risk for international investors and supply chains.

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.

Supply Chain Resilience and Diversification

South Korea and the EU are launching a dedicated supply chain dialogue to reduce dependence on specific countries and diversify channels. This initiative, driven by US-China competition, aims to enhance resilience and strategic partnerships, affecting sourcing and logistics decisions for international firms.

Liberalized Real Estate Laws Attract Foreigners

Recent amendments allow foreign ownership of Saudi land, sparking international interest in major urban and tourism projects. The new framework is reshaping the real estate sector, drawing investors and developers, though restrictions remain in Makkah and Madinah.

Geopolitical Tensions and Sanction Risks

US sanctions and new tariffs targeting countries trading with Iran, including Turkey, introduce significant uncertainty for regional trade. These measures could disrupt supply chains, increase compliance risks, and necessitate strategic adjustments for businesses engaged in cross-border operations.

Geopolitical Tensions and Regional Security Risks

Border disputes with India, instability in Afghanistan, and trilateral dynamics involving China heighten security risks for supply chains and cross-border trade. Persistent threats from militancy and unresolved regional conflicts add to operational uncertainties for international businesses.

Strategic Investments in Recycling Infrastructure

The French government and EU are mobilizing over €1.5 billion to strengthen domestic battery recycling and reuse capacity. This investment wave is attracting international partners, reshaping the competitive landscape, and fostering joint ventures in battery circularity.

Technology Controls and Decoupling Pressures

US export controls and tariffs on advanced chips, such as Nvidia’s H200, restrict China’s access to critical technology. China is accelerating domestic innovation and imposing its own export controls, intensifying tech decoupling and supply chain fragmentation.

Gulf Rivalry and Regional Instability

Intensifying competition with the UAE over influence in Yemen, Sudan, and Africa is fueling regional instability and media confrontations. This rivalry complicates diplomatic relations and could impact trade, investment flows, and supply chain security across the broader Gulf region.

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.

Demographic Drag and Labor Market Shifts

China’s population declined by 3.39 million in 2025, with a record-low birth rate and 23% of citizens over 60. This demographic shift pressures the labor force, social security, and long-term growth, forcing businesses to adapt to a rapidly aging consumer base.

Political Instability and Policy Uncertainty

Persistent political instability and inconsistent government policies have slowed economic growth and undermined investor confidence. These uncertainties impact long-term investment decisions and complicate integration into global supply chains, particularly for SMEs and foreign investors.

Widespread Civil Unrest and Political Instability

Nationwide protests over economic collapse and political repression have resulted in hundreds of deaths and thousands of arrests. The instability has led to internet shutdowns and business disruptions, significantly raising operational and security risks for foreign firms.

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.

Semiconductor Industry Policy Overhaul

South Korea passed a landmark law to strengthen its semiconductor sector, establishing a presidential commission and special funding. The law aims to secure technological leadership in AI chips, centralize support, and incentivize regional development, directly impacting global tech supply chains and investment flows.