Mission Grey Daily Brief - August 23, 2024
Summary of the Global Situation for Businesses and Investors
The global situation remains complex, with ongoing geopolitical tensions, economic shifts, and social unrest shaping the landscape. Russian President Vladimir Putin's visit to Azerbaijan strengthens Moscow's position in the region, while Germany faces challenges in maintaining support for Ukraine. A Canadian rail shutdown impacts the US economy, and France's Macron focuses on AI and economic ties with Serbia. Bangladesh faces political upheaval, and Ethiopia and Somalia clash over military presence demands.
Azerbaijan-Russia Relations
Russian President Vladimir Putin's visit to Azerbaijan on August 18-19 marks a significant development in Moscow's long-term strategy for the region. Despite historical tensions, Azerbaijan's participation in the 1991 referendum for the preservation of the USSR and the improvement in relations under Heydar Aliyev set the stage for the current rapprochement. This shift in Azerbaijan's stance grants Russia a strategic advantage in the region, enhancing its security posture and influence in the post-Soviet space.
Germany-Ukraine Support
Germany's commitment to supporting Ukraine is being tested by increasing political pressure and budgetary constraints. Amid evidence of Ukraine's involvement in the pipeline explosions, Chancellor Olaf Scholz reaffirms unwavering support, but his coalition government faces critical state elections in September, with far-left and far-right parties likely to gain traction and call for an end to military aid. Germany's constitutional debt limit further complicates financial decision-making, creating an uncertain environment for businesses and investors.
Canada-US Trade Disruptions
The shutdown of Canada's two major freight railroads due to contract disputes has disrupted cross-border shipping, impacting a range of industries in the US that rely on Canadian rail lines for raw materials and goods transportation. While the initial impact is minimal, a prolonged shutdown could slow US economic growth, trigger inflation, and lead to job losses. This situation underscores the interconnectedness of global supply chains and the potential for cascading effects on businesses and consumers.
France-Serbia Relations
French President Emmanuel Macron's upcoming visit to Serbia aims to strengthen economic ties and collaborate on AI development, with Serbia set to chair the Global Partnership on Artificial Intelligence in 2025. This trip follows Serbia's recent deal with the EU for access to raw materials, showcasing Serbia's strategic positioning and its potential as a regional leader in AI research.
Risks and Opportunities
- Risk: The Canadian rail shutdown could disrupt supply chains and trigger inflation in the US, affecting businesses and consumers.
- Risk: Germany's wavering support for Ukraine due to political and economic pressures may create uncertainty for investors and businesses with interests in the region.
- Opportunity: France's focus on AI and economic ties with Serbia opens avenues for investment and collaboration in the AI sector, with Serbia poised to play a leading role in responsible AI development.
- Opportunity: Azerbaijan's improved relations with Russia could present opportunities for businesses in the region, particularly in the energy and trade sectors.
Recommendations for Businesses and Investors
- Monitor the situation in Canada closely, as prolonged rail shutdowns could impact supply chains and increase costs for businesses and consumers.
- Exercise caution when investing in Germany and Ukraine due to the uncertain political and economic landscape, which may impact financial decisions and aid commitments.
- Explore opportunities in Serbia, particularly in the AI sector, as the country strengthens its position as a regional leader in AI research and development.
- Remain vigilant about the shifting geopolitical dynamics in the Caucasus region following Russia's improved relations with Azerbaijan, as this may impact business operations and investments.
Further Reading:
Do not be hostile to Russia: Azerbaijan has surpassed Georgia, Ukraine and Moldova - Eurasia Daily
Egypt’s oil & gas production to return to normal next year, says PM - Offshore Technology
France’s Macron to discuss AI and economy on trip to Serbia - WTAQ
German Support for Ukraine Comes Under New Strains - The New York Times
How a Canadian rail shutdown could worsen US inflation - ABC News
Themes around the World:
US-Taiwan Strategic Trade Integration
A new US-Taiwan trade agreement lowers tariffs to 15% and commits over $250 billion in bilateral investments, especially in semiconductors and AI. This deepens economic ties, boosts exports, and enhances Taiwan’s role in trusted supply chains.
US–Indonesia tariff deal pending
The Agreement on Reciprocal Trade is reportedly 90% legally drafted, reducing threatened US duties on Indonesian exports from 32% to 19%, while Indonesia would eliminate tariffs on most US imports. Digital-trade and sanctions-alignment clauses could reshape compliance and market-access strategies.
Escalating Cross-Strait Geopolitical Risks
China’s intensifying military drills and threats of reunification by force heighten the risk of conflict, blockades, or supply chain disruption. This persistent tension is a critical risk factor for international investors and global business operations.
Trade rerouting and buyer concentration
Russian crude increasingly flows to India and China; enforcement has widened discounts (reported ~$24/bbl in 2025) and pushed some refiners to diversify away from sanctioned suppliers. Buyer concentration heightens counterparty leverage, renegotiation pressure, and sudden demand shifts.
Persistent Energy Infrastructure Attacks
Russian strikes on Ukraine’s energy grid have caused widespread blackouts and threaten business continuity. Nearly 60% of Kyiv was recently without power, with similar conditions nationwide. Energy insecurity remains a top risk, impacting manufacturing, logistics, and foreign investment confidence.
Strategic Uncertainty in Overseas Assets
US military intervention in Venezuela and asset seizures have heightened risks for Russian overseas investments, particularly in energy. Russia’s efforts to protect assets in Venezuela and elsewhere underscore rising geopolitical competition, increasing the risk of expropriation or loss for Russian and international investors.
AI and Advanced Technology Leadership
Taiwan is leveraging its semiconductor and AI expertise to become a strategic partner for the US in artificial intelligence. Major investments target AI infrastructure, with TSMC and others expanding R&D and production, reinforcing Taiwan’s centrality in the global tech ecosystem.
Tariff rationalisation amid protectionism
Recent tariff schedules cut duties on many inputs, improving manufacturing cost structures, while maintaining high protection on finished goods in select sectors. This mix changes sourcing decisions, compliance requirements, and effective protection rates, influencing export orientation versus domestic-market rent-seeking.
China-Brazil Strategic Alignment
China is deepening its strategic partnership with Brazil, especially in agriculture and infrastructure, amid shifting global power dynamics. Increased Chinese imports of Brazilian soybeans and infrastructure investments strengthen bilateral economic ties and supply chain resilience.
Gaza Conflict Reshapes Regional Stability
The ongoing Gaza conflict and evolving ceasefire arrangements have heightened regional instability, disrupted trade routes, and increased security risks. International businesses face heightened uncertainty, with supply chains, cross-border operations, and investment strategies all affected by the volatile security environment and shifting political alliances.
Mining Sector Pressures and Logistics
Mining output declined 2.7% in late 2025 due to falling coal and iron ore production, rising costs, and logistical constraints. Global trade tensions, especially with the US and China, further threaten export volumes and investor confidence in this critical sector.
US-India trade deal recalibration
A framework for a reciprocal interim US–India agreement signals selective tariff relief tied to market-access concessions and rules-of-origin tightening. Companies should expect changing duty rates across textiles, chemicals, machinery and pharma inputs, plus increased focus on standards, NTBs, and supply-chain resilience clauses.
Surge in Strategic Infrastructure Investment
Despite high unemployment, Finland attracts multibillion-euro investments from US and Chinese tech giants in data centers, battery plants, and green energy. This influx is transforming Finland into a digital and green industrial hub, creating new supply chain interdependencies and reinforcing its role as a strategic safe harbor.
Escalating US-EU Trade Tensions
The US has threatened significant tariffs on French and European goods, notably a 10–25% levy linked to the Greenland dispute and a proposed 200% tariff on French wines. These measures risk disrupting transatlantic trade, impacting automotive, luxury, and technology sectors, and prompting potential EU retaliation.
EV manufacturing shift and competition
Thailand’s EV ramp-up is rapid: 2025 BEV production +632% to 70,914 units; sales +80% to 120,301. Chinese-linked supply chains expand as legacy OEMs rationalize capacity. Opportunities rise in batteries, components, and charging, alongside policy and localization requirements.
Energy policy and OPEC+ restraint
Saudi-led OPEC+ is keeping output hikes paused through March 2026, maintaining quotas amid surplus concerns and Iran-related volatility. For businesses, oil revenue sensitivity influences public spending, FX liquidity, project pacing, and input costs, especially energy-intensive industries.
Persistent Tariff and Regulatory Uncertainty
Despite new agreements, unresolved disputes over tariffs on key goods (EVs, canola, steel, aluminum) continue to disrupt supply chains and market access. The risk of retaliatory measures and regulatory unpredictability remains a significant operational challenge for international businesses in Canada.
Infrastructure and Logistics Modernization
Investment in logistics and infrastructure is accelerating, with Mexico’s 3PL market projected to grow from $14.4 billion in 2024 to $26.8 billion by 2033. Nearshoring, e-commerce, and public works like the Tren Maya drive demand for advanced warehousing, cross-border transport, and digital supply chain solutions.
Energy Sector Expansion and Transition
Recent agreements with China and Gulf states are boosting Canadian oil, LNG, and uranium exports, while also fostering collaboration in renewables and clean technology. These developments are pivotal for Canada’s energy sector, supporting both traditional exports and the transition to net-zero goals.
Semiconductor Sector Faces US Pressure
The US is leveraging tariffs and investment incentives to push Korean semiconductor giants like Samsung and SK hynix to expand US-based production. This industrial policy shift could reshape global supply chains, affect Korea’s tech leadership, and increase operational costs for Korean firms.
Persistent Energy and Power Constraints
South Africa continues to face chronic electricity shortages and grid instability, impacting industrial output and investor confidence. Despite some renewable energy progress, reliance on coal and delays in infrastructure upgrades create ongoing risks for manufacturing, mining, and supply chains.
China and Russia Strategic Partnerships
Iran’s economic and security dependence on China and Russia has deepened, with China absorbing over 80% of Iran’s oil exports and providing military, technological, and diplomatic support. These partnerships offer Iran lifelines but also expose foreign investors to secondary sanctions and geopolitical entanglements.
Gaza ceasefire uncertainty persists
Ceasefire implementation remains fragile, with intermittent strikes, aid-flow constraints and contentious governance/disarmament sequencing for post-war Gaza. Businesses face elevated security, force‑majeure and personnel-duty-of-care risks, plus potential reputational exposure and operational volatility tied to border closures.
Supply Chain Diversification and Resilience
Vietnam remains a key beneficiary of global supply chain shifts, especially as firms diversify away from China. Its strategic location, robust manufacturing base, and integration into RCEP and CPTPP enhance resilience, but exposure to global shocks and regulatory risks persists.
Current Account Deficit and Financing
Brazil’s current account deficit reached US$68.8 billion in 2025 (3.02% of GDP), financed mainly by long-term foreign investment. While trade balances remain positive, deficits in services and primary income require ongoing capital inflows to sustain external stability.
Critical Minerals and Mining Ambitions
With $2.5 trillion in mineral reserves, Saudi Arabia is investing $110 billion to become a regional mining and processing hub. Strategic partnerships, especially with the US, aim to reduce supply chain dependence on China and position the Kingdom as a key player in global mineral supply chains.
Labor Market and Workforce Realignment
Global tech and financial firms are shifting jobs to India amid US layoffs and AI adoption. Over 50% of surveyed companies plan to expand hiring in India in 2026, reflecting India’s growing role as a global talent hub and the impact of labor market reforms and skilling initiatives.
MSCI Flags Market Transparency Risks
MSCI has frozen Indonesian stock index rebalancing due to transparency and free float concerns, threatening a downgrade from emerging to frontier market status. This could trigger capital outflows, raise financing costs, and undermine investor confidence.
Technology Decoupling and Domestic Substitution
US-led export controls on semiconductors and AI technology have prompted China to restrict foreign tech imports and accelerate domestic innovation. Chinese firms are increasingly substituting domestic components, impacting global technology supply chains and market access for foreign firms.
Federal Reserve Policy and Political Pressure
The Federal Reserve has paused rate cuts at 3.6%, balancing persistent inflation (2.8%) and labor market stagnation. Political pressure from President Trump to lower rates and ongoing investigations into Fed leadership have raised concerns about central bank independence. Market expectations for further cuts in 2026 are muted, with Fed credibility and leadership transitions under intense scrutiny—factors that directly impact capital flows, currency valuation, and investment strategies.
Surge in Foreign Investment in Germany
Foreign direct investment in Germany more than doubled to €96 billion in 2025, surpassing German outbound investment for the first time since 2003. Political stability, EU market access, and legal certainty make Germany increasingly attractive for international investors, supporting growth and supply chain resilience.
Strategic Contest Over Port of Darwin
Australia’s push to reclaim the Chinese-leased Port of Darwin has provoked threats of economic retaliation from Beijing. The dispute highlights the intersection of national security and trade, with potential sanctions and investment restrictions affecting broader Australia-China commercial relations.
Digital tax reporting expands to SMEs
HMRC’s Making Tax Digital for Income Tax begins April 2026 for self‑employed/landlords over £50k, moving to quarterly submissions via paid software; thresholds fall to £30k (2027) and £20k (2028). This increases compliance cost, process change and advisory demand.
Critical Minerals Strategy Accelerates
Canada is rapidly advancing its critical minerals sector, with new provincial and federal strategies, international partnerships (notably with India), and investment in recycling. This positions Canada as a key supplier for global EV, battery, and tech supply chains, reducing reliance on China.
Landmark India-EU Free Trade Agreement
India’s comprehensive FTA with the EU, concluded in January 2026, eliminates tariffs on 90% of Indian exports and expands market access for goods and services. This deal will significantly boost bilateral trade, attract FDI, and enhance supply chain resilience, positioning India as a key alternative to China.
Tariff Policy and Global Trade Uncertainty
The US continues to use tariffs as a central economic tool, reducing its trade deficit but creating market uncertainty and diplomatic friction. Tariff adjustments have altered trade flows, increased costs, and complicated supply chain planning for international businesses operating in or with the US.