Shadow Fleet and Sanctions Evasion

Russia has developed a ‘shadow fleet’ of old tankers and parallel logistics to circumvent Western sanctions, shifting trade toward India, China, and Turkey. This opaque system increases operational risks and regulatory scrutiny for international businesses.

Communications Blackouts and Information Risks

Iran has imposed nationwide internet and phone shutdowns, severely restricting information flow. These blackouts hinder business continuity, disrupt logistics, and complicate due diligence, heightening operational uncertainty for all international stakeholders.

EU Customs Union Modernization Stalled

Despite strong business and diplomatic calls to update the EU-Turkey Customs Union, negotiations remain stalled. The outdated framework limits Turkey’s access to EU markets for services and agriculture, constraining trade growth and supply chain expansion for international firms.

Data Quality and Policy Uncertainty

Conflicting labor market data and survey reliability issues complicate economic policymaking and business planning. Discrepancies in unemployment and participation rates raise concerns about transparency and the accuracy of official statistics, increasing operational uncertainty for international investors.

Major Infrastructure and Logistics Expansion

Record infrastructure investment, especially in transport and logistics, is transforming states like Uttar Pradesh and Madhya Pradesh into key hubs. Platforms like PRAGATI enable efficient project execution, reducing bottlenecks and enhancing India’s competitiveness as a manufacturing and export base.

Agricultural Supply Chain Vulnerabilities

Railway grain shipments fell 27.3% in 2025, and wheat exports dropped 25% in December due to Russian strikes on ports and logistics. These disruptions, along with delayed harvests and market competition, threaten Ukraine’s role as a global food supplier and heighten risks for agribusiness investors.

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.

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.

Geopolitical Risks: Nile Water and Sudan

Tensions with Ethiopia over the GERD dam and instability in Sudan pose ongoing risks to water security, border stability, and regional alliances. US mediation efforts continue, but unresolved disputes could impact agricultural output, investment confidence, and cross-border trade.

Geopolitical Leverage of Critical Minerals

China is leveraging its dominance in rare earths and other critical minerals as a tool in geopolitical disputes, notably with Japan. Subtle export restrictions and licensing delays create uncertainty for global manufacturers, especially in high-tech and automotive sectors, and may prompt supply chain realignment.

Energy Infrastructure Under Severe Strain

Russian attacks have devastated Ukraine’s power grid, causing widespread outages and a declared energy emergency. Persistent winter conditions and infrastructure damage disrupt business operations, threaten supply chains, and require urgent imports and international support for repairs and resilience.

Sectoral Polarization in Export Competitiveness

While semiconductors and automobiles drive export growth, sectors like steel and machinery are losing ground due to Chinese competition and EU carbon border measures. This polarization challenges Korea’s export diversification and exposes supply chains to regulatory and market risks.

Energy Transition and Renewable Mandates

Indonesia is mandating a 10% ethanol blend in fuel by 2028 and accelerating coal-to-gas projects. These policies drive investment in renewables and biofuels, impact automotive and energy sectors, and align with decarbonization and energy security goals.

Domestic Infrastructure and Talent Pressures

Relocation of manufacturing and increased overseas investment may strain Taiwan’s domestic infrastructure and talent pool, potentially impacting innovation capacity and competitiveness at home, while intensifying the need for workforce development and policy adaptation.

Green Transformation and Regulatory Burden

Germany’s ambitious green policies have increased regulatory complexity and compliance costs for businesses. While supporting climate goals, these measures contribute to capital flight, slower investment, and concerns about overregulation, particularly for small and medium-sized enterprises.

Labor Market and Talent Dynamics

Taiwan’s advanced manufacturing sector is experiencing labor shortages and competition for engineering talent, exacerbated by global expansion. Demographic trends and workforce development are critical factors for sustaining innovation and operational resilience.

Regional Geopolitical Ambitions and Risks

Saudi Arabia is asserting a more independent regional role, recalibrating relations with Iran, Turkey, and the UAE, and engaging in Yemen. While this enhances its influence, ongoing regional instability and shifting alliances present risks to supply chains, investment security, and long-term business planning.

Rising Franco-German Defense and Policy Tensions

France is increasingly uneasy about Germany’s €500 billion defense buildup and growing influence in European security and industrial policy. Disputes over joint defense projects and diverging strategic priorities could affect cross-border investments and the future of European industrial cooperation.

Strategic Trade Pact Engagements Expand

South Korea is actively seeking entry into the CPTPP and deepening trade ties with Japan and other partners. These efforts aim to secure market access, strengthen supply chain cooperation, and offset risks from bilateral tensions with major economies.

Japan’s Strategic Rare Earth Mining Push

Japan has launched the world’s first deep-sea rare earth mining trial near Minamitori Island, aiming to reduce dependence on China. Success could transform Japan into a key supplier, but technical, environmental, and cost hurdles remain, with full-scale operations targeted for 2027.

Infrastructure Concessions Drive Investment Surge

A record wave of infrastructure concessions—50 auctions in 2023-2025—has attracted over R$229 billion in private investment, especially in ports, highways, and energy. This shift to private sector-led development is improving logistics but also exposes projects to regulatory, financial, and execution risks.

Tariff Policy Drives Supply Chain Shifts

The US maintains an aggressive tariff regime, especially against China, driving sourcing shifts to Southeast Asia and legal challenges to tariff authority. Businesses must adapt to a new baseline of higher costs, regulatory complexity, and supply chain reconfiguration.

Accelerated OECD Accession and Reforms

Indonesia is fast-tracking its accession to the OECD, aligning policies with international standards to improve governance, regulatory quality, and competitiveness. This process is expected to boost investor confidence, enhance the investment climate, and facilitate greater integration with global markets.

FDI Reforms and High-Value Sector Focus

Thailand is shifting its investment strategy to attract FDI in high-tech, green infrastructure, and wellness tourism. Legal and regulatory reforms, infrastructure upgrades, and anti-corruption initiatives aim to reposition Thailand as a regional hub for future industries, but execution remains critical.

Renewable Energy Transition Accelerates

Major projects like the 2 GW Tathra wind, solar, and battery development highlight Australia’s rapid shift from coal to renewables. Fast-tracked approvals and grid investments are transforming the energy landscape, creating opportunities in clean technology but also raising questions about grid reliability and transition costs.

Political Instability and Budget Deadlock

France faces acute political instability as the government struggles to pass the 2026 budget, risking no-confidence votes and potential snap elections. This uncertainty undermines investor confidence, complicates fiscal planning, and could affect France’s credit rating and business environment.

Critical Technologies and Supply Chain Security

Germany is prioritizing cooperation in semiconductors, critical minerals, and digital technologies, especially with trusted partners like India. New joint declarations and centers of excellence aim to reduce overdependence on single suppliers and enhance supply chain resilience in strategic sectors.

Economic Stability Amid Global Volatility

Praised by the OECD, Australia’s economic management has delivered low unemployment, controlled inflation, and avoided recession. Ongoing reforms in energy, competition, and housing policy underpin a stable environment for international trade and investment, though global uncertainty and productivity challenges persist.

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.

Suez Canal Economic Zone Expansion

The Suez Canal Economic Zone reported a 55% revenue increase and $14.2 billion in contracted investments, with new projects in industrial and port sectors. Despite recent disruptions, the zone remains pivotal for global supply chains, regional manufacturing, and Egypt’s export growth strategy.

Northern Sea Route and Arctic Ambitions

Russia’s development of the Northern Sea Route, with Chinese and Indian involvement, aims to create a major Eurasian trade corridor. While promising shorter Asia-Europe shipping, the project faces geopolitical risks, environmental concerns, and possible sanctions exposure for participating firms.

Geopolitical Uncertainty and Transatlantic Alliances

The UK’s foreign policy is challenged by unpredictable US actions and shifting global alliances. Diplomatic efforts to maintain strong US and EU ties are critical for security and economic stability, but volatility in American policy increases risks for UK business operations and investment.

Fed Independence Faces Political Threats

The US Federal Reserve is under unprecedented political pressure, with DOJ subpoenas against Chair Powell amid Trump administration efforts to influence rate policy. Erosion of central bank independence risks market volatility, higher inflation, and diminished investor confidence in US assets.

Sovereign Wealth Fund and State Enterprise Reform

The Danantara sovereign wealth fund, managing $1 trillion in assets, is positioned to finance future industries and co-invest with global partners. Plans to rationalize state-owned enterprises from 1,044 to 300 aim to enhance efficiency and governance, signaling a more modern and open investment environment.

Major Infrastructure and Digital Expansion

India’s infrastructure financing is integrating with global capital markets, focusing on green, resilient, and tech-enabled projects. Data center capacity doubled in 2025, with projections to triple by 2030, supporting digital transformation and robust supply chain logistics.

EU Tightens Oil Price Cap Measures

The European Union will lower the Russian oil price cap to $44.1 per barrel from February 2026, intensifying restrictions on Russian crude and refined products. Russia has responded with export bans under price cap contracts, further complicating global energy supply chains and compliance for international traders.