Corporate Support and Tax Reform Risks

As fiscal adjustment intensifies, scrutiny of France’s extensive business support is increasing, with some economists arguing companies should share more of the burden. That raises the possibility of subsidy redesign, fewer sectoral benefits, and shifts from production taxes toward consumption or green levies.

EV And Advanced Industry Push

Thailand is reinforcing its role as Southeast Asia’s largest EV manufacturing base while courting investment in battery materials, aviation engineering, and AI-linked infrastructure. This supports long-term industrial upgrading, but requires firms to assess incentives, supplier localization, and technology-partnership opportunities carefully.

Red Sea Shipping Exposure

Houthi threats against Israel-linked vessels have revived major maritime risk in the Red Sea and Bab el-Mandeb. Earlier attacks involved more than 100 incidents, sank four ships, and disrupted roughly $1 trillion in trade, increasing freight, insurance, and routing costs for Israel-linked supply chains.

Aviation and connectivity expansion

Riyadh Air will begin flights in July, targeting more than 100 destinations by 2030 with up to 72 Dreamliners. Despite airspace disruption, Saudi Arabia is pushing ahead as an aviation hub, improving business access, tourism inflows, and cargo connectivity.

AI-Led Export Surge

Taiwan’s export performance is being powered by AI-related electronics demand, with May exports rising 51.7% year on year to US$78.48 billion. Strong growth supports investment momentum, but also heightens dependence on cyclical tech demand and external policy conditions.

Foreign Investment Quality Debate

France remains Europe’s top destination by project count, with 852 projects in 2025, but investment quality is under scrutiny as projects fell 17% year-on-year and often generate fewer jobs than peers. Businesses should distinguish headline announcements from actual implementation and local economic depth.

China Investment Security Screening

UK officials signaled stricter scrutiny of Chinese investment in national infrastructure, following the blocking of a wind turbine plant in Scotland. Companies should expect more national security review risk around critical technologies, energy assets, advanced manufacturing, and strategic partnerships.

Trade Policy Volatility Persists

Frequent U.S. trade actions, appeals, proclamations and investigation deadlines are compressing planning horizons for manufacturers and investors. Exposure to Vietnam, Brazil, metals inputs and forced-labor scrutiny now requires scenario planning, contract flexibility and faster procurement realignment.

Ceasefire Deadlock Delays Reconstruction

Negotiations remain stalled over Hamas disarmament, Israeli withdrawals, and Gaza governance, delaying any credible reconstruction framework. That prolongs humanitarian strain, complicates donor engagement, limits cross-border commercial normalization, and sustains political risk premiums for regional investors and counterparties.

Election-Linked Policy Uncertainty

Local elections and expected leadership changes, including the prime minister’s possible resignation, are creating short-term political uncertainty. For investors, this may affect cabinet reshuffles, industrial policy continuity, infrastructure priorities, and the pace of regulatory or fiscal decisions relevant to foreign businesses.

Cross-Strait Security Overhang

Business planning remains shadowed by Taiwan Strait tensions and uncertainty around US security commitments. Debate over a pending US$14 billion arms package, coupled with persistent Chinese pressure, elevates contingency, insurance, shipping, and board-level resilience planning for multinational firms.

Strategic Balancing Supports Friendshoring

Hanoi continues balancing relations with both Washington and Beijing while positioning itself as a preferred manufacturing and friendshoring destination. This diplomatic flexibility supports investment inflows, but businesses must still monitor South China Sea tensions, U.S.-China rivalry and policy shifts affecting trade routes.

November Critical Minerals Cliff

The suspension of broader October 2025 rare-earth restrictions runs only until November 10, 2026. If reinstated, extraterritorial controls could affect third-country products using Chinese-origin material, sharply widening compliance risk and disrupting multinational manufacturing, sourcing and export planning.

Political Fragmentation Before Elections

Domestic political uncertainty is intensifying as Prime Minister Netanyahu navigates coalition pressures and election calculations. Policy decisions on war, spending, regulation and reconstruction may remain tactical and volatile, complicating long-horizon investment planning, approvals, public procurement strategies and market-entry timing.

Steel, Aluminum and Trade Defense

Sectoral tariffs and extended Canadian anti-dumping quotas are reshaping metals trade. Ottawa has kept steel and aluminum import limits in place for another year, while linking broader changes to a future U.S. deal, raising costs and compliance burdens for manufacturers.

Higher-for-Longer US Interest Rates

Federal Reserve officials are openly considering further tightening as inflation remains above target, with markets pricing meaningful hike risk. Elevated borrowing costs raise hedging, refinancing, and capital-expenditure hurdles, while also supporting dollar strength that can pressure exporters, emerging-market demand, and portfolio allocations.

Coal Dependence and Energy Transition

Indonesia’s power mix remains about 61% coal, despite a US$21.4 billion Just Energy Transition Partnership pledge, of which only around US$3.1 billion has been formally approved. Slow disbursement prolongs carbon exposure, power-cost uncertainty, and transition risk for manufacturing, mining, and data-center investors.

Thai-Cambodia Border and Maritime Tensions

Bangkok’s suspension of wider bilateral talks with Cambodia, continued border-gate closures, and UN-backed conciliation over a 26,000 sq km disputed Gulf area with energy stakes near $300 billion heighten logistics, labor mobility, security, and cross-border trade risks for regional operators.

US Trade Access and Tariff Frictions

Washington plans to approve 18 Indonesian tariff-exclusion requests under Section 301, yet an additional 10% tariff remains in place for now. At the same time, U.S. concerns over Indonesia’s import licensing create uncertainty for exporters, manufacturers, and firms relying on smoother bilateral trade flows.

Trade Routes and Shipping Stress

Regional conflict continues to pressure maritime and air connectivity serving Israel, particularly through the Red Sea and wider Eastern Mediterranean. Exporters and importers should expect higher freight, rerouting, delivery uncertainty and inventory-buffer requirements, especially for time-sensitive industrial and technology supply chains.

Geopolitical Energy Shock Management

West Asia conflict risks are feeding oil-price volatility, shipping disruption and inflationary pressure. Indian authorities say roughly 60% to 70% of crude imports now use less exposed routes or suppliers, but sustained energy shocks would still strain margins, logistics costs, and macro stability.

Tensions sociales dans les transports

La grève nationale SNCF du 10 juin a perturbé TGV, TER, RER et fret passagers, avec environ un TGV sur trois supprimé. Les revendications salariales et contre la filialisation signalent un risque persistant de perturbations logistiques et de mobilité des salariés.

India FTA implementation uncertainty

Implementation of the UK-India free trade agreement may slip to autumn 2026 as steel safeguard disputes persist, creating uncertainty for tariff planning, sourcing strategies, and market-entry timing for firms expecting improved access across goods, services, and investment flows.

EU Market Access Becomes Tougher

The Mercosur-EU opening is already being tested by European restrictions on Brazilian beef over sanitary and traceability concerns. With potential losses above US$2 billion, agrifood exporters face stricter certification demands, greater regulatory asymmetry and a higher risk of politically driven market-access interruptions.

US-Taiwan Defense Uncertainty

A proposed US$14 billion U.S. arms package remains under review amid broader Washington-Beijing bargaining. The uncertainty matters for investors because perceived deterrence credibility directly shapes Taiwan risk premiums, asset valuations, board-level contingency planning, and confidence in long-term manufacturing commitments.

Buy British Procurement Push

The government is advancing procurement reform and defence offset policies to favor domestic jobs, suppliers, and UK-made components. This could reshape market access for foreign contractors, increase localization expectations, and alter bidding strategies in defence, infrastructure, steel, shipbuilding, and AI.

Oil and Gas Transit Resilience

Turkey preserved energy supply security despite Hormuz-related disruption risks through diversified imports and strategic infrastructure. First-quarter gas imports reached 19.2 bcm and oil products 3.32 million tons, reinforcing Turkey’s importance for energy-intensive industry, shipping and regional distribution networks.

Semiconductor Industrial Policy Expansion

Japan continues backing strategic chip capacity through subsidies, supply-chain support, and closer allied coordination, reinforcing its role in advanced manufacturing. For foreign investors, this creates opportunities in semiconductors, materials, and equipment, but also raises compliance and localization expectations.

Energy Import Dependence Bites

Egypt consumes around 7 billion cubic feet of gas daily versus domestic production near 4 billion, sustaining import dependence. The monthly gas import bill reportedly jumped from $560 million to $1.65 billion, raising power, industrial input, and fiscal pressures.

US Tariff Dispute Escalates

Washington has proposed lifting tariffs on most Australian goods to 12.5% from 10% from July 24, citing forced-labour enforcement gaps. Although beef, gold, pharmaceuticals, energy and rare earths appear exempt, exporters face higher compliance burdens, pricing pressure and policy uncertainty.

Customs Enforcement Burden Expands

A new executive order directs tighter customs enforcement against transshipment, undervaluation, forced-labor exposure, and importer-of-record abuse. Companies should expect higher bond requirements, expanded beneficial-ownership disclosures, more supply-chain documentation, and greater audit and penalty risks at the U.S. border.

China Ties Stabilise Uneasily

Canberra is seeking a more stable, productive relationship with China, but security frictions persist around maritime transparency and regional coercion. For business, this supports trade continuity while preserving medium-term policy volatility across resources, agriculture, education, and logistics.

Geopolitical Balancing Complicates Partnerships

Indonesia is broadening commercial ties with Russia, India, the United States, Europe and Eurasia simultaneously, creating opportunity through diversification but also exposing firms to sanctions sensitivity, regulatory uncertainty, reputational risks and strategic policy shifts across competing blocs.

External Sector Fragility

Pakistan’s external position improved through March, supported by remittances rising 8.2% and a $72 million current-account surplus, but April swung to a $324 million deficit after regional conflict. Businesses remain exposed to oil-price spikes, freight volatility, and foreign-exchange pressure.

Export Manufacturing Localization Push

The government is pushing higher-value manufacturing to reach a $100 billion export target, while expanding industrial land allocations and simplifying company formation. New textile and tyre investments, including major Chinese and Turkish projects, strengthen Egypt’s appeal as a cost-competitive export platform.

Regional Supply-Chain Diversification Push

Japanese firms and policymakers are intensifying diversification across critical minerals, energy procurement, and strategic manufacturing after repeated shocks from China and global conflicts. This supports investment into Australia, Southeast Asia, stockpiling, and supplier redundancy, while increasing transition costs in the near term.