Inflation Moderation and Currency Stability

Annual inflation fell to 10.3% in December 2025 from 23.4% a year earlier, mainly due to lower food prices. However, non-food inflation remains high, and the Egyptian pound is under pressure from debt and import needs, affecting consumer demand and business costs.

Political and Regional Security Instability

Ongoing political uncertainty and regional security risks, particularly regarding Afghanistan and Kashmir, affect investor confidence. Pakistan and China are urging verifiable action against terrorism in Afghanistan, while regional disputes continue to pose operational and reputational risks.

Ruble Volatility and Financial Strain

The Russian ruble faces renewed pressure due to falling export revenues and reduced central bank interventions. Currency instability heightens risks for foreign investors and complicates cross-border transactions and financial planning.

100% FDI Liberalization in Insurance

India's new policy allowing 100% foreign direct investment in insurance is expected to attract global capital, boost innovation, and expand market coverage. This reform enhances competition but requires careful regulatory oversight to manage risks and ensure local benefits.

Accelerating Trade Surplus and Export Growth

Vietnam’s trade surplus exceeded $20 billion in 2025, with exports reaching $475 billion and targeting 8% growth in 2026. Foreign-invested sectors drive this performance, while the US and China remain key partners. Trade policy reforms and FTAs underpin expansion, but rising global barriers and origin fraud risks require vigilance.

Resilience and Momentum in Financial Markets

Israel’s financial sector demonstrates post-war resilience, with strong international investor confidence reflected in a $6 billion bond issuance and robust banking sector performance. These trends support capital flows and investment strategies, though they remain sensitive to geopolitical volatility and global economic shifts.

Supply Chain Diversification Efforts

Global companies are increasingly diversifying supply chains to Vietnam to mitigate risks from China-centric dependencies. Vietnam's competitive labor costs and improving infrastructure make it a preferred alternative, boosting its role in global manufacturing and logistics networks.

Intensified Technology Export Controls

China is strengthening legal frameworks and oversight on technology exports, particularly in AI, semiconductors, and rare metals. Tighter reviews and restrictions on foreign acquisitions and technology transfers reflect Beijing’s focus on national security and self-reliance, impacting cross-border investment and innovation flows.

Trade Policy Uncertainty and Export Risks

Geopolitical tensions, sanctions on Russia, and trade disputes with the US have weakened external demand for German goods. Exporters face ongoing uncertainty, especially in automotive and machinery sectors, complicating supply chain planning and global market strategies.

Resilience Amid US Tariff Pressures

Despite 50% tariffs imposed by the US in 2024, Brazil’s exports reached a record US$348.7 billion in 2025. Diversification toward China, Argentina, and new markets offset US losses, but ongoing negotiations and potential tariff reimpositions remain a risk for exporters.

Ongoing Government Restructuring and Reform

President Zelenskyy continues to overhaul key ministries and security agencies, aiming to align governance with wartime needs and anti-corruption standards. These changes are critical for maintaining Western support but add short-term uncertainty to regulatory and business environments.

Ambitious Double-Digit Growth Targets

Vietnam is targeting sustained GDP growth of over 10% annually through 2030. This aggressive goal is tied to deep economic reforms, industrial upgrading, and infrastructure investment, but its feasibility is challenged by global trade headwinds, tariff risks, and the need for innovation-driven growth.

Regulatory Environment and Business Reforms

Ongoing regulatory reforms aimed at improving the ease of doing business in Israel enhance investor confidence. Streamlined procedures and improved corporate governance standards positively influence foreign investment and operational efficiency.

Declining Foreign Investment and Modernization

Foreign investment in Russia is falling, with an 8.7% drop in machinery and equipment imports. Industrial modernization is stalling, and capital controls remain tight, making Russia less attractive for international investors and hampering technology transfer.

Strategic US-Taiwan Technology Partnership

The agreement establishes a high-tech strategic partnership, with joint industrial parks and reciprocal investment in semiconductors, AI, defense, and biotech. This deepens bilateral ties and positions Taiwan as a critical partner in US-led technology and innovation ecosystems.

Escalating Western Sanctions Pressure

The US and EU have intensified sanctions on Russia, targeting energy exports and trade partners. New US legislation could impose tariffs up to 500% on countries buying Russian oil, threatening to disrupt global trade flows and complicate supply chains.

Supply Chain Diversification Imperatives

Japanese firms are intensifying efforts to diversify suppliers, particularly for critical minerals and advanced components. Moves to secure alternative sources in Australia and North America aim to mitigate the impact of Chinese restrictions and enhance long-term business continuity.

Territorial Disputes Complicate Peace Talks

Negotiations remain fraught over territorial control, especially in Donetsk and Zaporizhzhia. Russia demands concessions, while Ukraine resists, affecting the framework for postwar business operations, property rights, and investment security in disputed areas.

US-China Relations Remain Volatile

Ongoing tensions and policy reversals in US-China economic relations continue to disrupt trade flows, investment decisions, and technology transfers. Businesses face persistent risk from tariffs, regulatory changes, and unpredictable bilateral negotiations.

Privatisation Drive Reshapes Economy

Pakistan’s accelerated privatisation of state-owned enterprises, including PIA and major banks, is central to meeting IMF bailout conditions. This transformation aims to attract investment, reduce fiscal deficits, and restructure key sectors, but raises concerns over job security and national control.

Commodity Export Restrictions

Indonesia's government has implemented export restrictions on key commodities like nickel and palm oil to boost domestic processing industries. This policy aims to increase value-added production locally but disrupts global supply chains, causing price volatility and forcing international buyers to seek alternative sources or adjust procurement strategies.

Energy Security and Eskom Reform

South Africa’s improved energy stability, following Eskom’s R254 billion bailout and operational reforms, has reduced load shedding and restored investor confidence. However, high electricity costs and municipal debt remain risks for energy-intensive industries and future investment.

Regulatory Reforms and Private Sector Incentives

The government is implementing new tax incentives, customs reforms, and digitalization to attract investment and support local industry. IMF reviews and international partnerships are driving structural changes, but bureaucratic hurdles and military influence still challenge private sector growth.

International Security Guarantees for Ukraine

Ukraine’s allies, including the US, France, and UK, are finalizing robust security guarantees and peacekeeping arrangements. These legal commitments aim to deter future Russian aggression and stabilize the business environment, crucial for investor confidence and long-term operations.

Vision 2030 Economic Diversification Drive

Saudi Arabia continues to shift from oil dependency by investing in sectors like tourism, technology, mining, and renewable energy. Vision 2030 reforms drive non-oil GDP growth, foster innovation, and create new opportunities for international trade and supply chain integration.

Renewable Energy Transition Challenges

Australia’s ambitious shift to renewables is marked by rapid project approvals and grid integration successes, but also rising system costs, policy uncertainty, and continued reliance on coal for grid stability. Businesses face evolving regulatory frameworks and investment risks in the energy sector.

Mining and Industrial Diversification Push

Strategic partnerships and investments are transforming Saudi Arabia into a regional mining and industrial hub. New aluminum complexes and mining service giants are being established, supporting Vision 2030’s goal to reduce oil dependency and localize high-value supply chains, with substantial workforce development initiatives.

US-China Technology Competition and Export Controls

US policy reversals on AI chip export controls have allowed Nvidia to resume sales to China, raising concerns about US technological leadership and intellectual property risks. This shift could boost China’s AI capabilities, alter global tech supply chains, and intensify the race for technological standards and market access.

Structural Labor and Property Market Challenges

High household debt (86.8% of GDP), labor shortages, and a fragile property market with unsold stock and tight credit constrain domestic demand and business expansion. Government stimulus and reforms are needed to address these structural weaknesses and support sustainable growth.

Currency Controls and Ruble Weakness

Reduced oil revenues and lower central bank FX sales are weakening the ruble. Currency controls and capital restrictions complicate cross-border transactions, profit repatriation, and risk management for foreign enterprises operating in Russia.

Persistent Cartel Violence and Risk

Ongoing cartel violence, drug trafficking, and organized crime remain major risks for business operations, especially in northern states. Despite recent high-profile arrests and extraditions, fragmentation and adaptation of criminal groups continue to threaten logistics, investment, and workforce safety.

Political Stability and Institutional Reform

President Sheinbaum’s administration faces debates over electoral and judicial reforms, with opposition warning of risks to democratic institutions. Market reactions have been positive so far, but political uncertainty could affect investor confidence and regulatory predictability.

Geopolitical Tensions Impact Supply Chains

Export controls, especially U.S. restrictions on semiconductor technology to China, create operational uncertainty for Korean firms. Temporary exemptions for Samsung and SK Hynix highlight ongoing risks to production stability and cross-border supply chain planning.

Energy Transition and Infrastructure Investment

Brazil is investing in energy transition projects, including renewable fuels and electric mobility, supported by public-private partnerships. These initiatives enhance supply chain resilience and sustainability, but execution risks and regulatory uncertainty remain.

Nationwide Protests and Legitimacy Crisis

Iran faces its largest protests in decades, driven by economic collapse, inflation exceeding 40%, and a generational rejection of the ruling system. The unrest, spreading to all provinces, threatens regime stability and disrupts business operations.

Security Threats from Weapons Proliferation and Smuggling

The widespread availability of illegal weapons, fueled by smuggling from Iran and regional instability, poses a growing national security threat. This environment increases operational risks for businesses, complicates supply chain security, and demands heightened vigilance in risk management and compliance frameworks.