Infrastructure Development and Modernization

Efforts to modernize transportation, logistics, and industrial infrastructure aim to improve Iran's business environment. However, progress is uneven, and infrastructure deficits continue to pose challenges for efficient supply chain management and market access.

Infrastructure Expansion and Urban Development

Major infrastructure projects, including transport and power grid upgrades, are driving economic growth and urban transformation. Hanoi’s record budget revenue and full disbursement of public investment funds highlight the government’s commitment to sustainable development and improved business environment.

Macroeconomic Stabilisation and Reform

Comprehensive reforms have sharply reduced inflation from 29.2% to 4.5%, improved tax revenues, and turned the current account deficit into a surplus. These measures have restored investor confidence and generated a positive trajectory for GDP growth, crucial for international business planning.

Rare Earth Supply Chain Vulnerabilities

Japan’s heavy reliance on Chinese rare earths—still 60-70% of supply—faces new threats as Beijing considers tighter export permit reviews. Prolonged restrictions could cost Japan up to $17 billion annually, impacting global supply chains for EVs, electronics, and defense.

Iran-China and Iran-Russia Partnerships

Iran relies on China for 90% of oil exports and has deepened strategic ties with Russia, including infrastructure and military cooperation. These alliances provide economic lifelines but expose businesses to secondary sanctions and geopolitical volatility.

Currency Stability Amid Economic Pressures

The Egyptian pound has shown relative stability, with the dollar trading around 47.3–47.7 EGP. However, a rising current account deficit and reliance on foreign reserves signal underlying vulnerabilities, affecting import costs, profit repatriation, and business risk assessments for international firms.

Labor Market Shifts in High-Tech Sectors

The semiconductor boom is transforming Korea’s labor market, with rising demand for high-skill roles in design, engineering, and logistics. However, automation and advanced manufacturing may reduce jobs in legacy production lines, requiring workforce reskilling and adaptation for sustained competitiveness.

Supply Chain Diversification Amid Trade Fragmentation

Global trade tensions and US tariff policies are prompting UK firms to accelerate supply chain diversification and near-shoring. This trend is increasing operational complexity and costs, but also offers resilience against geopolitical shocks and trade disruptions.

Government Crackdown and Human Rights Risks

Iran’s leadership has signaled a tougher crackdown on dissent, deploying security forces and restricting media. This increases reputational and compliance risks for foreign firms, especially regarding human rights and ethical standards.

Regulatory Uncertainty And Tax Burden

Iran’s government plans significant tax hikes and economic liberalization amid recession risks. Policy unpredictability, frequent regulatory changes, and opaque enforcement complicate business planning, increase compliance costs, and deter foreign direct investment.

Wartime Economy Spurs Tax Hikes

Facing stagnant GDP growth (0.1%) and falling industrial output, Russia has raised consumption taxes and introduced new levies on electronics to offset shrinking energy income. These measures increase costs for businesses and consumers, impacting investment strategies.

Thai-Cambodian Border Conflict Risks

Persistent clashes and fragile ceasefires along the Thai-Cambodian border have disrupted trade, displaced over 500,000 people, and led to significant investment delays in border regions. Ongoing tensions threaten cross-border supply chains and regional stability.

Geopolitical Tensions and Sanctions Risks

Escalating geopolitical tensions, such as Iran’s designation of the Royal Canadian Navy as a terrorist organization, increase risks for Canadian international operations. Sanctions, diplomatic disputes, and retaliatory measures can disrupt supply chains, trade flows, and investment strategies in sensitive markets.

Energy Supply Constraints

Chronic energy shortages and infrastructure deficits hamper industrial productivity and increase operational costs. Frequent power outages and reliance on imported fuels affect manufacturing output and logistics, posing significant challenges for businesses dependent on reliable energy supply.

Rising Global Trade Barriers

U.S. tariffs and the EU’s Carbon Border Adjustment Mechanism are increasing costs for Korean exports, particularly autos, steel, and electronics. These barriers challenge competitiveness and require strategic adjustments in pricing, compliance, and market targeting for international businesses.

Environmental Regulation and Plantation Ban

West Java’s ban on new oil palm plantations and push for sustainable crops reflect tightening environmental regulations. The policy aims to prevent degradation and water shortages, affecting agribusiness strategies and signaling broader ecological priorities in land use.

Infrastructure and Regulatory Bottlenecks

Industrial development faces delays due to spatial planning (RTRW) and infrastructure issues, including electricity and logistics. Resolving these bottlenecks is critical for accelerating foreign investment and improving supply chain efficiency in key sectors.

Accelerating Foreign Direct Investment Inflows

Vietnam’s FDI surged 8.9% in 2025, reaching $23.6 billion, driven by high-tech manufacturing and green industries. Continued reforms and digital transformation are attracting global investors, but heavy reliance on foreign capital exposes Vietnam to external shocks and geopolitical risks.

Energy Security and Geopolitical Intervention

The US’s assertive energy doctrine, exemplified by intervention in Venezuela, reflects a strategy to secure hydrocarbon dominance and counter rivals like China and Russia. This approach influences global energy markets, supply chain decisions, and investment risks in resource-rich regions.

Energy Transition and Biomass Expansion

Indonesia’s PLN EPI is scaling up biomass supply to reduce coal use in power plants, aiming for lower carbon emissions and sustainable energy. Strategic partnerships and regulatory compliance are central, impacting energy sector investments and ESG-focused supply chains.

Supply Chain Resilience and Critical Technologies

Recent Indo-German agreements emphasize collaboration on semiconductors, critical minerals, and digital technologies. These initiatives aim to secure supply chains, foster joint R&D, and support Industry 4.0, reflecting Germany’s strategic response to global disruptions and technological competition.

Critical Minerals Access and Infrastructure Gaps

Greenland’s mineral wealth offers major supply chain opportunities, but extraction is hindered by lack of infrastructure and skilled labor. International investors face high entry barriers, regulatory uncertainty, and potential political disruption, impacting resource strategies and industrial planning.

Industrial Investment and Regional Modernization

Major investments in sectors like aerospace, steel, chemicals, and logistics—such as Airbus Helicopters’ €600 million modernization and Marcegaglia’s €750 million low-carbon steel plant—demonstrate France’s focus on industrial competitiveness, job creation, and sustainable development, shaping the long-term business environment.

Grid Stability Amid Climate Extremes

Australia’s electricity grid demonstrated resilience during recent heatwaves, with solar supplying over 60% of peak demand. However, winter supply risks persist, requiring ongoing investment in storage and backup systems to ensure energy security for industrial users.

Geopolitical Security Concerns

Heightened geopolitical risks, including cyber threats and military tensions, affect the security landscape for US businesses. These concerns necessitate increased investment in risk management and contingency planning to safeguard assets and supply chains.

Strategic Public-Private Infrastructure Pipeline

The government has unveiled a Rs 17 lakh crore PPP project pipeline, offering early visibility for investors and accelerating infrastructure growth. This initiative strengthens long-term economic prospects and positions India as a major destination for global infrastructure capital.

Regulatory and Business Environment Reforms

Ongoing reforms aim to improve Vietnam's regulatory framework, enhance transparency, and reduce bureaucratic hurdles. These changes foster a more conducive environment for foreign investment and ease of doing business, though implementation consistency remains a concern.

GCC Integration and Strategic Partnerships

The Gulf Cooperation Council (GCC) advanced regional unity, security, and economic integration in 2025, with joint defense, customs, and infrastructure projects. Saudi Arabia’s role in the GCC enhances its global influence and stability, supporting cross-border trade and investment.

AI Disruption and Labor Market Shifts

Rapid adoption of artificial intelligence is transforming US business operations, driving productivity but also causing job displacement and sluggish hiring. Firms are reassessing workforce strategies, with significant implications for employment, wage growth, and the structure of supply chains.

Green Growth and Infrastructure Modernization

China’s 15th Five-Year Plan emphasizes sustainable development, green manufacturing, and infrastructure upgrades. Major investments in renewable energy, digital infrastructure, and smart logistics offer opportunities for international partners, but also raise competitive and regulatory challenges.

Black Sea Grain Export Disruptions

Ongoing Russian attacks on Odesa and other Black Sea ports target civilian ships and port infrastructure, aiming to disrupt Ukraine’s agricultural exports. These disruptions threaten global food security and complicate logistics for international trade partners.

Mining Sector Liberalization and Growth

The Ministry of Industry awarded 172 mining site licenses to 24 companies, including global players, committing SAR671 million to exploration. Mining is positioned as a key industrial pillar, unlocking SAR9.4 trillion in mineral wealth and strengthening mineral supply chains.

Energy Transition and Policy Uncertainty

Despite federal efforts to revive fossil fuels, market forces and state policies have driven record renewable energy growth. However, abrupt regulatory changes, project cancellations, and legal disputes have created a volatile investment climate, especially in wind, solar, and EV supply chains.

Labor Market Stagnation and Wage Pressure

US job growth slowed sharply in late 2025, with only 50,000 jobs added in December and unemployment at 4.4%. Hiring is concentrated in healthcare and leisure, while other sectors stagnate. Wage growth remains moderate at 3.8% annually, raising concerns about economic dynamism, consumer demand, and future cost structures.

Danish Defense Policy Hardens

Denmark reaffirmed its Cold War-era policy to defend Greenland militarily against any invasion, including from NATO allies. This stance increases regional tensions and could trigger direct conflict, affecting risk assessments for foreign investment and multinational operations in Denmark.

Geopolitical Pressures On US Allies

China’s escalation of trade controls against Japan tests US support for key allies and disrupts critical industries. These pressures complicate regional alliances, impact supply chains, and heighten risks for multinational firms operating in East Asia and North America.