Electric Vehicle Industry Challenges

Thailand’s EV sector faces financial and operational risks highlighted by NETA’s dealer network crisis involving unpaid government subsidies worth ฿400 million. Dealer closures and warranty concerns threaten supply chains and consumer trust, while rising insurance premiums and export uncertainties challenge Thailand’s ambitions to become a regional EV manufacturing and export hub.

Fentanyl Crisis and Cartel Sanctions

US sanctions targeted leaders of the Jalisco New Generation Cartel (CJNG) for fentanyl production and trafficking, including blocking their US assets. The cartel’s control over key ports and drug routes exacerbates security risks, complicates bilateral relations, and poses challenges for supply chain security and investor confidence in Mexico.

US Pressure on Mexico for Narco-Linked Politicians

The US government is intensifying demands for Mexico to investigate and extradite politicians suspected of cartel ties, threatening economic sanctions including tariffs. This diplomatic pressure underscores concerns about corruption’s impact on governance and rule of law, influencing political stability and foreign investment risk perceptions in Mexico.

Rare Minerals Dependency and Industry-Government Collaboration

India’s dependence on rare earth minerals critical for automotive, electronics, and defense sectors poses long-term supply risks. Addressing this requires strategic industry-government collaboration, policy support, and international partnerships to develop domestic capabilities and diversify import sources, ensuring supply chain security for emerging technologies.

Industrial Energy Subsidy Revisions

The government revoked industrial electricity discounts effective July 2025, ending a five-year subsidy aimed at supporting industrial competitiveness. This policy shift reflects fiscal consolidation efforts amid rising energy costs and global market volatility. Industries must reassess cost structures and pricing, potentially affecting production costs, export competitiveness, and investment decisions in energy-intensive sectors.

Political Instability and Governance Risks

Prime Minister Paetongtarn Shinawatra’s government faces severe political turmoil following a leaked phone call with Cambodian leader Hun Sen, triggering mass protests, coalition fractures, and potential legal actions including treason charges. This instability threatens policy continuity, investor confidence, and could precipitate a coup, undermining Thailand’s political and economic stability.

Political Instability and Legal Probes

The raid on France's far-right National Rally party headquarters amid campaign finance investigations highlights political instability risks. This ongoing probe into alleged illegal financing and EU fund misuse could impact investor confidence, political risk assessments, and regulatory scrutiny, influencing France's domestic political landscape and its implications for business operations and international partnerships.

Geopolitical Risks Impacting Supply Chains

Ongoing conflicts in the Middle East, Ukraine, and rising tensions with Russia and Iran pose significant risks to UK supply chains, particularly energy and critical minerals. The government acknowledges potential disruptions from hostile state activities, necessitating strategic preparedness and diversification to safeguard trade routes, manufacturing inputs, and digital infrastructure vital for business continuity.

Migration and Workforce Dynamics in France

France remains a key destination for immigrants seeking employment, influencing labor supply and demographic trends. Migration policies and integration affect workforce availability, skills diversity, and social stability, which are critical factors for businesses planning long-term investments and operational expansions.

Middle East Geopolitical Conflict

The escalating Israel-Iran conflict and U.S. military strikes on Iranian nuclear sites have heightened geopolitical risks, impacting global oil markets, supply chains, and investor sentiment. The potential disruption of the Strait of Hormuz, a critical oil chokepoint, threatens energy security and could cause oil prices to spike above $100 per barrel, affecting inflation and economic growth worldwide.

Energy Innovation in Data Center Infrastructure

Tokyo Gas Engineering Solutions is promoting city gas-powered generators for data centers, enabling faster facility startups and improved energy efficiency through waste heat utilization. This innovation addresses power grid development delays, supporting Japan’s growing digital economy and attracting investment in data infrastructure, while enhancing supply chain resilience for tech-dependent industries.

Geopolitical Tensions and Security Risks

Heightened geopolitical tensions, exemplified by NATO's calls for increased defense spending amid Russian threats, impact Vietnam's strategic environment. These developments influence regional security dynamics, potentially affecting foreign investment confidence, supply chain stability, and trade routes in Southeast Asia, where Vietnam plays a critical role.

Control of Strategic Lithium Deposits

Russia’s capture of key lithium deposits in eastern Ukraine, including the Shevchenko site, threatens Ukraine’s role in Europe’s green energy transition. Lithium is critical for electric vehicle batteries and reducing EU dependence on Chinese supply chains. Loss of these resources undermines Ukraine’s post-war economic recovery and shifts rare earth metal leverage towards Russia, impacting global supply chains and investment in clean technologies.

Security Concerns and Crime Impact

Rising violent incidents, including mass shootings and armed confrontations, contribute to a challenging security environment. This undermines public safety, increases operational risks for businesses, and can deter foreign investment, necessitating enhanced law enforcement and social interventions.

Oil Price Volatility and Energy Market Risks

Following U.S. strikes on Iran, oil prices surged significantly, with Brent crude reaching highs not seen in months. Potential Iranian retaliation could disrupt oil flows through the Strait of Hormuz, causing prices to spike up to 30%, impacting inflation, consumer costs, and energy-dependent industries globally. This volatility poses risks to supply chains and economic stability in the U.S. and worldwide.

Western Sanctions and Economic Resilience

Despite unprecedented Western sanctions targeting trade, energy, and finance sectors since 2022, Russia's economy has demonstrated resilience with over 4% growth annually and rising real incomes. The government’s strategic pivot towards BRICS nations and self-sufficiency in energy and food production mitigates sanction impacts, influencing international investment risk assessments and supply chain realignments.

Western Sanctions and Asset Freezes

Western sanctions, including freezing over $300 billion of Russia's international reserves, significantly impact Russia's financial operations and international trade. These measures have led to Moscow condemning the actions as illegal and threatening retaliatory steps. The sanctions restrict Russia's access to global financial systems, complicate foreign investment, and drive Russia to seek alternative financial mechanisms and partnerships.

Tariffs and Consumer Spending Pressure

Ongoing tariffs combined with rising energy prices due to Middle East tensions are expected to squeeze American household spending power. Higher costs for imported goods and fuel may reduce disposable income, potentially slowing consumer demand and impacting retail and manufacturing sectors, thereby influencing broader economic growth trajectories.

Supply Chain Security and Critical Minerals

At the G7 summit, Canada emphasized securing supply chains and critical minerals, focusing on transparency and ethical sourcing from fragile regions like the Democratic Republic of Congo. This theme addresses vulnerabilities in global supply chains, aiming to establish labour and environmental standards that impact international trade policies, investment in resource sectors, and Canada’s role in critical mineral markets.

Return of Foreign Companies

President Putin’s directive to create new rules facilitating the return of foreign firms that exited post-Ukraine conflict signals potential reopening of the Russian market. This move, balancing foreign business interests with domestic priorities, could reshape investment strategies and international corporate operations, contingent on geopolitical relations and Russia’s ‘unfriendly country’ policies.

Strategic Energy Transit Vulnerabilities

Turkey’s proximity to critical energy chokepoints like the Hormuz Strait underscores its strategic importance but also exposes it to global energy supply shocks. Disruptions in regional energy flows can cause volatility in oil prices and impact Turkey’s energy-dependent industries and trade balances. Investors must consider geopolitical risks affecting energy transit routes passing near or through Turkey.

Geopolitical Trade Alignments and BRICS

The U.S. administration targets countries aligned with the BRICS coalition (Brazil, Russia, India, China, South Africa) with additional tariffs, intensifying geopolitical trade divides. BRICS nations advocate for multilateral trade frameworks and oppose unilateral tariffs, challenging U.S. trade dominance. This dynamic risks fragmenting global trade systems and complicating diplomatic and economic relations.

Japan’s Trade Deficit Challenges

Japan recorded a significant trade deficit of 637.6 billion yen in May 2025, highlighting ongoing challenges in balancing imports and exports. This deficit pressures the yen, affects industrial competitiveness, and necessitates strategic adjustments in trade and supply chain management to maintain economic resilience.

US Trade Court Blocks Fentanyl Tariffs

A US federal trade court blocked President Trump’s use of emergency powers to impose tariffs on Mexican imports targeting fentanyl trafficking. Although an appeal is pending, this ruling temporarily alleviates tariff pressures on Mexican exporters, reducing trade uncertainty and supporting cross-border economic activity.

Regulatory and Legal Reforms in Real Estate

Amendments to Egypt’s Old Rent Law introduce phased termination of fixed-rent contracts with significant rent increases, impacting residential and commercial tenants. This reform addresses long-standing market distortions but raises concerns about affordability and social stability. The government’s allocation of land for new housing aims to mitigate displacement risks, affecting real estate market dynamics and investment strategies.

US-China Trade War and Tariffs

Ongoing US-China trade tensions have led to tit-for-tat tariffs affecting hundreds of billions in goods, disrupting supply chains and investment flows. Despite recent trade talks and tentative frameworks, structural divergences remain. Tariffs continue to challenge US companies operating in China, prompting localization, production shifts, and uncertainty in bilateral trade relations.

Energy Security and Transition to Electric Vehicles

Volatile global oil prices driven by Middle East conflicts threaten Australia's energy security, given its heavy reliance on imported liquid fuels. This instability accelerates interest in electric vehicles and renewable energy adoption, presenting opportunities and challenges for supply chains, infrastructure investment, and emissions reduction targets.

Geopolitical Instability Impacting Commodity Markets

Geopolitical tensions, including the Ukraine conflict and Middle East unrest, have disrupted global supply chains, notably causing a 54% surge in platinum prices due to supply deficits from Russia’s Nornickel. Similarly, aluminum and copper prices have risen amid concerns over Persian Gulf stability. These fluctuations affect global trade costs, investment in resource sectors, and strategic sourcing decisions.

Complex Taxation and Regulatory Risks

Brazil’s complex tax system, including recent hikes in the IOF tax on financial transactions, raises borrowing and investment costs by billions of reais. Resistance from lawmakers and business groups highlights risks of regulatory unpredictability, discouraging investment and complicating business operations, especially in finance, fintech, and international capital flows.

Industrial Policy and Customs Enforcement

The government has established a specialized committee to combat customs evasion, protect local industries, and improve market integrity. Efforts include infrastructure upgrades in industrial zones, stricter licensing controls, and promoting local content in manufacturing. These initiatives aim to strengthen domestic production, reduce import dependency, and enhance export competitiveness.

Improved Sovereign Default Risk Profile

Pakistan has achieved the largest global reduction in sovereign default risk among emerging markets, with CDS-implied probability dropping from 59% to 47%. This improvement reflects macroeconomic stabilization, structural reforms, successful IMF engagement, and timely debt servicing, enhancing investor confidence. The positive credit outlook supports better access to international financing and investment inflows, bolstering economic recovery prospects.

France’s Labour Market and High-Paying Sectors

France’s top-paying jobs concentrate in aviation, corporate management, healthcare, legal, and finance sectors, with executives earning up to €200,000 annually. This wage structure influences talent attraction, retention, and labor costs, shaping investment decisions and operational strategies for multinational companies operating in France’s competitive labor market.

Expansion of Direct US-Thailand Air Connectivity

Thailand’s government advances plans to establish direct flights to the United States supported by visa clearance services and regulatory cooperation following FAA Category 1 status restoration. This initiative is poised to boost tourism, trade, and investment, enhancing Thailand’s position as a regional aviation hub and strengthening bilateral economic ties.

Energy Subsidy Fiscal Burden

Indonesia’s government energy subsidies are under significant pressure due to rising global oil prices. With subsidized fuel prices kept below economic levels, increased crude prices could add tens of trillions of rupiah to subsidy costs, straining the state budget, increasing fiscal deficits, and forcing potential reallocation of expenditures or subsidy adjustments.

Geopolitical Tensions and Global Security

The NATO summit's call for increased defense spending, driven by US pressure to raise military budgets to 5% of GDP, reflects heightened geopolitical tensions impacting global security dynamics. This affects international trade and investment strategies as countries reallocate resources, potentially disrupting supply chains and increasing defense-related expenditures in Vietnam's trade partnerships.

Judicial Independence and Rule of Law Crisis

Systematic erosion of judicial independence and failure to implement European Court of Human Rights rulings have triggered a rule of law crisis in Turkey. Political interference in judiciary and suppression of opposition weaken legal predictability, increasing country risk for foreign investors and complicating trade and contractual enforcement.