Manufacturing and FDI Surge Amid PLI Schemes

India attracted $51 billion in FDI in six months, driven by government incentives, PLI schemes, and a focus on advanced manufacturing. Sectors like semiconductors, EVs, and electronics are seeing robust investment, strengthening India’s position as a global manufacturing hub.

Resetting China Relations Amid Tariffs

Prime Minister Carney’s visit to China marks a pivotal attempt to repair bilateral ties after years of diplomatic and tariff disputes. The outcome will impact Canadian agriculture, energy, and manufacturing exporters, but engagement is constrained by ongoing security and human rights concerns.

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.

Automotive Sector Tariff and Rule Changes

Ongoing negotiations on auto tariffs and rules of origin are central to Mexico’s export competitiveness. Mexico seeks tariff reductions for non-compliant vehicles, while the US pushes for higher regional content. These changes directly impact investment and production strategies in the auto sector.

MSCI Developed Market Index Inclusion

The government’s roadmap for MSCI developed market index inclusion seeks to boost foreign investment and stock market liquidity. Reforms in currency convertibility and market access could significantly enhance Korea’s attractiveness for global investors and portfolio managers.

Labour-Intensive Sector Tax Incentives

The government will cover personal income taxes for workers in labour-intensive industries until 2026, supporting household income and economic stability. This stimulus benefits sectors like textiles, footwear, and tourism, enhancing resilience and competitiveness for international investors.

Geopolitical Frictions and Technology Partnerships

Diplomatic disputes, such as with Taiwan, and South Africa’s assertive foreign policy stance create uncertainty for technology and industrial cooperation. Pragmatic engagement with global tech leaders is essential for advancing digital infrastructure and maintaining competitiveness in advanced manufacturing.

Special Investment Facilitation Council Scrutiny

The SIFC, established to streamline investment, faces criticism for lack of transparency and overlapping mandates with the Board of Investment. The IMF and Finance Ministry warn that insufficient disclosure of incentives and decisions may erode investor confidence and policy predictability.

Regional Energy Partnerships and Gas Hub Role

Egypt is leveraging its infrastructure to become a regional energy hub, signing supply and cooperation agreements with Israel, Cyprus, Qatar, and Syria. These partnerships support energy security, regional integration, and cross-border investment, but depend on stable infrastructure and geopolitical conditions.

Labor Market Cooling And Automation Trends

US job openings have dropped to multi-year lows, with hiring remaining sluggish despite solid economic growth. Automation and AI adoption may sustain output without significant job creation, impacting wage dynamics, consumer demand, and workforce planning for global firms.

Suez Canal Revenue Volatility

The Gaza conflict caused Egypt to lose $9 billion in Suez Canal revenues over two years, as shipping was rerouted, impacting foreign exchange earnings and global supply chains. Ongoing regional instability continues to threaten this vital trade artery.

Widespread Protests and Political Instability

Mass protests driven by economic hardship and political repression have spread nationwide, resulting in hundreds of deaths. The risk of regime change or violent crackdowns creates extreme uncertainty for investors, supply chains, and operational continuity.

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.

Energy Infrastructure Under Persistent Attack

Russian missile strikes continue to target Ukraine’s energy grid, causing widespread power outages and threatening industrial operations. The instability in energy supply poses significant risks for manufacturing, logistics, and foreign investment in affected regions.

Energy and Critical Minerals Cooperation with Asia

Recent agreements with China are expanding Canadian oil, LNG, uranium, and clean energy exports to Asia. This diversification of energy partnerships supports Canada’s energy transition but raises questions about foreign investment screening and national security in strategic sectors.

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.

Innovation, AI, and Digital Transformation

India is accelerating its digital economy through AI, tech innovation, and digital asset regulation. The government is fostering R&D, digital infrastructure, and responsible AI, positioning India as a global leader in digital services and technology-driven growth.

Green Hydrogen Industry Expansion

Australia is scaling up its green hydrogen sector through major projects like the Tasmania initiative, supported by favorable policies and international partnerships. This positions Australia as a leader in clean energy exports, with significant implications for industrial supply chains and investment flows.

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.

Infrastructure Investment and Bottlenecks

Vietnam plans to secure $5.5 billion in foreign loans for 2026 and up to $38 billion by 2030 to fund major infrastructure projects. Persistent disbursement delays due to land clearance, project approval, and administrative hurdles could impact project timelines and investor confidence.

Monetary Policy and Inflation Management

Turkey has reduced inflation from over 42% to just above 30% in 2025, with further declines targeted for 2026. Tight monetary policy and structural reforms have stabilized the economy, but high inflation and currency volatility remain key risks for investors and supply chain planners.

US-Taiwan Semiconductor Trade Accord

The 2026 US-Taiwan trade deal slashes US tariffs on Taiwanese goods to 15% in exchange for at least $250 billion in Taiwanese chip investments in the US. This reshapes global supply chains, incentivizes US-based production, and strengthens bilateral economic ties.

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.

US-EU Trade Tensions Escalate

The US has imposed new tariffs of up to 25% on German and European goods, citing geopolitical disputes. This has led to a sharp decline in German exports to the US, especially in automotive and steel, and threatens supply chain stability and investment planning.

China-Pakistan Economic Corridor 2.0 Expansion

Pakistan and China agreed to upgrade CPEC, focusing on industry, agriculture, mining, and infrastructure. The new phase aims to deepen trade, technology, and investment ties, with third-party participation encouraged, making CPEC central to Pakistan’s growth and regional integration.

Energy Security and Diversification

Turkey is diversifying energy imports, expanding LNG capacity, and prioritizing renewables to reduce dependency and mitigate supply shocks. These efforts support long-term economic stability and present opportunities for energy sector investment and supply chain optimization.

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.

India-Israel FTA and Bilateral Trade Shift

India and Israel are advancing a Free Trade Agreement to reverse a 52% drop in Indian exports and boost investment. The FTA aims to expand trade in high-tech, defense, and medical sectors, reshaping supply chains and market access for global businesses.

AI-Led Revival in Technology Sector

India’s IT sector is poised for gradual revival in 2026, driven by enterprise AI adoption and digital transformation. While near-term growth is muted due to cost pressures and global headwinds, scaled AI deployments are expected to support long-term deal flow and sector competitiveness.

Regulatory Reforms and Investment Climate

Egypt accelerated regulatory reforms in 2025, including tax law updates, IP system overhaul, and personal data protection laws. These changes aim to attract foreign investment, improve compliance, and foster innovation, but implementation and enforcement remain business concerns.

Energy Transition and Nuclear Expansion

France’s €52 billion commitment to new nuclear reactors underscores its strategy for energy security and decarbonization. However, hardware shortages, dependence on Asian imports, and rising energy nationalism across Europe create operational and investment uncertainties for energy-intensive industries and infrastructure projects.

Resilient Domestic Productivity and AI Adoption

Despite policy headwinds, US productivity is surging, driven by AI and digital transformation. This boosts corporate earnings and offsets some labor constraints, but the benefits are uneven and depend on continued innovation and investment.

Political Uncertainty and Regulatory Reform

Political instability, policy inconsistency, and upcoming elections in 2026 heighten regulatory risk. Recent reforms in competition law, land equity audits, and foreign investment rules are closely watched by investors, as shifts in governance and regulatory direction could impact market access and business operations.

Regulatory Uncertainty for Foreign Investors

China’s evolving regulatory environment, including increased scrutiny of foreign acquisitions and new restrictions on sensitive sectors, creates uncertainty for international investors. While IPO reforms and market opening continue, the risk of abrupt policy shifts remains a key concern for strategic planning.

Infrastructure Deficits And Service Delivery

Persistent infrastructure challenges—especially in electricity, water, and transport—hamper economic growth and business operations. Municipal debt, unreliable utilities, and deteriorating urban services increase costs and operational complexity for companies reliant on stable infrastructure.

Supply Chain Resilience Initiatives Grow

US policy is driving supply chain regionalization and risk management, with emphasis on domestic sourcing and infrastructure investment. This trend increases costs but enhances resilience against geopolitical disruptions and trade turmoil.