Logistics Connectivity Upgrades Accelerate

Authorities are pushing port, corridor and logistics upgrades to attract higher-value trade and FDI. Ho Chi Minh City is pursuing direct U.S. shipping links, while central provinces promote deep-water ports, airports and border-gate connectivity to reduce transport costs and improve resilience.

Strategic US-Japan Investment Linkage

Tokyo is implementing a $550 billion strategic investment pledge tied to tariff reductions and may add another $100 billion in projects. This deepens policy-driven capital flows into energy, manufacturing, and technology, but increases exposure to US political bargaining and compliance conditions.

Hormuz Shipping Disruption Risks

Conflict-driven restrictions in the Strait of Hormuz have sharply disrupted commercial traffic, with roughly 20 vessels attacked and normal daily passages far below prewar levels. Higher freight, insurance and rerouting costs are creating immediate trade, supply-chain and operational exposure across energy-intensive sectors.

Currency pressure complicates planning

The rupee has come under severe pressure from higher oil prices and geopolitical stress, recently falling to record lows beyond 94 per dollar. This increases imported-input costs and hedging needs, while affecting margins, inflation exposure, and capital allocation decisions for foreign businesses.

Credit Growth Supports Diversification

Saudi bank lending to the private sector and non-financial public entities rose 10% year on year to SAR3.43 trillion in January. Strong domestic credit supports business expansion, though prolonged regional conflict could tighten liquidity, raise inflation and delay external fundraising plans.

Rare Earth Supply Leverage

China’s controls over rare earths and magnets continue to reshape industrial sourcing. January-February exports to the US fell 22.5% year on year to 994 tonnes, while shipments to the EU rose 28.4%, underscoring strategic concentration risks for automotive, electronics and defense-adjacent manufacturers.

Rare Earth Supply Weaponization

China’s rare earth and critical mineral export controls remain a major leverage point in trade disputes. These materials are essential for EVs, electronics, defense, and renewables, so licensing uncertainty and possible retaliatory restrictions create acute sourcing risk, inventory pressure, and diversification costs globally.

Monetary Easing, Cost Volatility

Brazil’s central bank cut the Selic rate to 14.75% from 15%, but inflation forecasts remain elevated at 3.9% for 2026 and oil-linked fuel volatility is complicating logistics, financing costs, working capital planning, and demand conditions for foreign investors and operators.

Security Threats to Logistics

Cargo theft and organized-crime exposure remain serious operational risks for transport-heavy sectors. Recent analysis finds cargo theft in Mexico is more violent and overt than in Texas, forcing companies to spend more on route security, tracking and private protection.

Financial Isolation Constrains Transactions

Iran remains largely cut off from SWIFT, leaving payment settlement, trade finance, and FX repatriation difficult even when cargoes are available. Banking restrictions elevate transaction costs, reduce deal certainty, and deter multinational participation across energy, industrial, shipping, and consumer sectors.

Energy export and power strain

Offshore gas disruptions have hit domestic power costs and regional exports. The shutdown of Leviathan and Karish was estimated to cost roughly 1.5 billion shekels in four weeks, including a 22% rise in electricity generation costs and lost exports to Egypt and Jordan.

Power Mix Policy Uncertainty

Taiwan is reconsidering nuclear restarts while also increasing coal use to manage fuel insecurity and AI-driven electricity demand. This fluid policy mix affects long-term power pricing, carbon strategies, permitting expectations and site-selection decisions for energy-intensive industries.

Water Infrastructure Risks Intensify

Water insecurity is emerging as a growing operational and political risk. Treasury is mobilising reforms and investment, while South Africa still depends heavily on Lesotho water transfers supplying about 60% of Johannesburg’s needs, exposing business to service and regional bargaining risks.

Fiscal Strain and Budget Reprioritization

Israel’s 2026 budget sharply increases defense spending to about NIS 143 billion, widens the deficit target to 4.9% of GDP and cuts civilian ministries. Businesses should expect tighter public finances, delayed infrastructure priorities and policy volatility around taxes and state support.

Won Volatility and Outflows

The won weakened beyond 1,500 per dollar in late March, while average daily won-dollar trading hit a record $13.92 billion and foreign investors sold 35.9 trillion won in KOSPI shares. Currency volatility raises hedging costs, valuation uncertainty and import-price pressure.

Tariff Uncertainty Reshapes Trade

The United States remains the main source of global trade-policy volatility as sweeping 2025 tariffs, subsequent court challenges, and replacement measures keep import costs elevated. Businesses face persistent pricing uncertainty, rerouted sourcing, and higher compliance burdens across cross-border trade and procurement planning.

Quality Rules Complicate Market Access

India’s expanding Quality Control Orders and certification requirements continue to affect imports of components, chemicals and industrial inputs. While supporting domestic manufacturing objectives, unclear timelines and burdensome compliance can delay sourcing decisions, increase testing costs and disrupt multinational supply-chain planning.

Resource Quotas and Supply

Nickel and coal output are being managed through RKAB quotas and benchmark price adjustments to avoid oversupply. Delayed approvals and tighter ore availability have lifted domestic feedstock prices, creating procurement uncertainty, input-cost inflation, and potential shipment disruptions for manufacturers and commodity traders.

AI Industrial Deployment Accelerates

China’s open-source AI ecosystem is expanding rapidly despite chip restrictions, with Chinese models gaining global traction and feeding off industrial deployment data. This strengthens China’s competitiveness in logistics, robotics and manufacturing, increasing both partnership opportunities and technology-transfer, cybersecurity and competitive risks.

Regional conflict and security risk

Israel’s exposure to Gaza and Iran-linked escalation remains the primary business risk. Ceasefire implementation is fragile, Israeli strikes continue, and reconstruction is stalled, sustaining elevated political violence, insurance, compliance, staffing, and operational continuity risks for investors and multinationals.

PLI Strategy Under Review

India’s flagship production-linked incentive regime is drawing fresh scrutiny after only about ₹28,748 crore, roughly 15% of allocated incentives, had been disbursed by December 2025. Uneven sector outcomes may trigger redesigns affecting investors’ manufacturing assumptions, subsidy timing, and export competitiveness.

Chip Controls Tighten Again

Bipartisan momentum behind the MATCH Act points to stricter semiconductor export controls on China, including DUV lithography and servicing bans. This could reshape electronics supply chains, pressure allied suppliers, and deepen compliance burdens for global technology manufacturers.

Water Stress In Industrial Hubs

The driest winter in 75 years has triggered rationing and emergency water transfers in western Taiwan, including Hsinchu and Taichung. Water scarcity threatens chipmaking and industrial output, forcing conservation measures and highlighting climate-related operating risks for manufacturers.

US Tariff Regime Volatility

Washington is rapidly rebuilding tariffs after the Supreme Court struck down IEEPA duties, using Section 232, Section 301 and Section 122. New pharmaceutical tariffs reach 100%, while metal duties remain up to 50%, complicating sourcing, pricing and contract planning.

Ports and Reconstruction Constraints

Port Vila’s broader rebuild and geotechnical investigations highlight ongoing infrastructure rehabilitation after recent shocks. Although supportive over time, reconstruction can constrain port handling, utilities, contractor availability, and transport interfaces, affecting cruise-linked construction schedules, last-mile logistics, and service reliability for island developments.

Inflation and Rate Pressure Rising

Headline inflation eased to 3.7% in February, but fuel and fertiliser shocks are expected to reverse progress, with some forecasts pointing toward 4.5-5.0% inflation, raising borrowing costs, weakening demand visibility, and complicating pricing, hiring, and capital-allocation decisions.

Energy Exports Gain Strategic Weight

U.S. LNG exports hit a record 11.7 million metric tons in March as Middle East disruptions tightened supply. Rising U.S. energy importance supports exporters and infrastructure investment, while also affecting input costs, freight economics and buyer dependence abroad.

Sector Tariffs Hit Industrial Exports

U.S. tariffs continue to weigh on strategic Mexican exports, especially autos, steel and aluminum. Steel exports reportedly fell 53% under 50% U.S. duties, while automotive parts tariffs are raising supplier costs and complicating pricing, production planning and cross-border investment decisions.

Strategic Procurement Favors Domestic Firms

New guidance treats steel, shipbuilding, AI and energy infrastructure as critical to national security, with departments expected to justify overseas sourcing. This increases opportunities for local suppliers but may raise market-entry barriers and compliance demands for foreign vendors competing for contracts.

Mining Policy And Exploration Constraints

South Africa’s mineral potential is strong, but exploration remains weak due to cadastre delays, tenure uncertainty and administrative bottlenecks. The country attracted only 1% of global exploration spending in 2023, constraining future mining output, beneficiation and critical-mineral supply chains.

Deflation and Weak Domestic Demand

China is in a prolonged low-price environment, with producer prices reportedly falling for 40 consecutive months and the GDP deflator still negative. Weak consumption, fragile employment, and pricing pressure are squeezing margins, complicating revenue forecasts, and limiting the strength of domestic-market growth strategies.

Logistics Bottlenecks and Rerouting

Damage to Baltic terminals and the Druzhba route, alongside storage congestion in Transneft’s system, is forcing cargo diversion to rail and alternative ports. Businesses face higher inland transport costs, longer lead times, and spillover disruption for Russian and Kazakh energy exports moving through shared infrastructure.

Policy Activism Raises Execution Risk

The government is increasingly using quotas, export duties, subsidy adjustments, and interventionist industrial measures to manage fiscal and strategic pressures. For international businesses, frequent policy recalibration raises compliance burdens, contract uncertainty, and the need for stronger scenario planning and local stakeholder management.

Mining Policy and Exploration Gap

Mining remains central to exports and foreign investment, yet weak exploration threatens future supply. South Africa captured only 1% of global exploration spending in 2023, with investors still focused on cadastre delays, tenure security and mining law reform.

Auto Hub Navigates EV Shift

Thailand’s vehicle output rose 3.43% in February and pure EV production surged 53.7%, yet domestic BEV sales fell after incentives expired and exports weakened amid a strong baht and tougher Chinese competition, complicating automotive investment planning.

Infrastructure and Port Expansion

Major port, airport and corridor projects are improving Vietnam’s supply-chain attractiveness, notably Da Nang’s $1.7 billion Lien Chieu terminal and logistics upgrades linked to Cai Mep–Thi Vai. Better maritime connectivity should reduce costs, diversify routes, and support export-oriented manufacturing investment.