Domestic Demand Erosion and Labor Stress

Iran’s business environment is deteriorating as layoffs, shortages, and purchasing-power losses intensify. Reports indicate around two million direct and indirect job losses and rising factory dismissals, reducing market attractiveness, increasing social instability risks, and undermining partners’ operational resilience.

Tax and VAT Rules Shift

Recent tax changes, including revised VAT rules effective June 20, 2026, alter exemptions, deductions and treatment of selected financial and export activities. Companies should reassess invoicing, payment documentation, mineral exports and transaction structures to avoid compliance gaps and cash-flow inefficiencies.

Fuel import vulnerability exposed

Australia’s heavy dependence on imported liquid fuels has become a frontline business risk. China supplied about 30% of jet fuel last year, while Middle East disruption and export curbs threaten aviation, mining logistics, freight continuity and broader commodity exports.

Climate and Security Resilience Gaps

IMF climate financing is advancing disaster-risk, water-pricing, and climate disclosure reforms, while persistent militant threats and infrastructure vulnerabilities still weigh on operations. Investors must factor in physical climate exposure, security costs, and business-continuity planning, especially in logistics and frontier industrial zones.

EU Trade Frictions Persist

Post-Brexit barriers continue to weigh on U.K.-EU commerce: 60% of small traders report major obstacles, 85% of goods SMEs report problems, and 30% may cut EU trade. Customs, VAT, inspections, and labeling complexity continue to disrupt cross-border supply chains.

Domestic Gas Reservation Shift

Canberra will require east coast LNG exporters to reserve 20% of output for domestic buyers from July 2027, seeking lower prices and supply security. The measure supports local industry but raises uncertainty for LNG investors, contract structuring, and regional energy trade flows.

China Re-engagement Brings Tradeoffs

Canada is cautiously reopening trade channels with China to secure relief for canola and agri-food exports, including lower duties in exchange for limited EV access. This may widen sourcing options, but increases exposure to geopolitical, regulatory, and market-dependence risks.

US Trade Deal and Tariff Uncertainty

Taiwan’s market access to the United States is improving, but tariff policy remains fluid. Taipei is prioritizing preservation of the 15% non-stacking tariff arrangement, while Section 301 scrutiny over overcapacity and forced labor creates planning uncertainty for exporters and investors.

Fiscal Expansion and Budget Strains

Berlin’s 2027 budget framework combines heavy borrowing, defense growth and infrastructure spending, but leaves roughly €140 billion in financing gaps through 2030. For investors, this means stronger public procurement opportunities alongside rising tax, subsidy and borrowing uncertainty.

Labor Unrest In Manufacturing

Escalating union disputes at Samsung, Hyundai and other major manufacturers threaten production continuity in semiconductors, autos and shipbuilding. A possible Samsung strike alone could reportedly cause about 30 trillion won in losses, delaying exports, disrupting suppliers, and weakening Korea’s industrial competitiveness.

US Trade Talks Remain Fluid

India-US trade negotiations are advancing, but volatile US tariff policy and ongoing Section 301 probes create uncertainty. With India’s 2025 goods exports to the US at $103.85 billion, exporters face shifting market-access assumptions, compliance risks, and delayed investment decisions.

Nearshoring Potential, Execution Bottlenecks

Mexico remains a prime nearshoring destination and attracted more than $40 billion in FDI in 2025, yet projects are slowed by bureaucracy, permit delays and uneven implementation. Investors increasingly judge Mexico on execution capacity rather than proximity alone.

FDI Diversification into Industry

Turkey attracted 475 announced greenfield FDI projects in 2025 worth $21.1 billion and 47,251 jobs, with strength in manufacturing, communications, automotive, logistics, electronics and renewables. This broadening pipeline supports supplier entry, industrial partnerships and medium-term capacity growth despite macro volatility.

US-Bound Investment Reallocation Intensifies

Taiwanese firms are accelerating investment into the United States under bilateral trade arrangements, with reported commitments of $250 billion and TSMC alone investing $165 billion in Arizona. This supports market access, but may redirect capital, talent, and supplier ecosystems away from Taiwan-based operations.

Currency Strength, Export Competitiveness

The real has strengthened alongside high interest-rate differentials and commodity support, helping contain imported inflation and attracting financial inflows. For businesses, this lowers some import costs but can compress export margins, complicate hedging, and alter market-entry pricing strategies.

Imported Energy and LNG Exposure

Taiwan remains heavily exposed to imported fuel and maritime energy chokepoints. Natural gas supplies cover roughly 11 days, while gas accounts for about half of power generation, leaving manufacturers vulnerable to higher costs, price volatility, and external shipping disruptions.

SEZ Incentives And Investment Rules

Pakistan has agreed to amend SEZ and Special Technology Zone laws, shift from profit-based to cost-based incentives, and phase out fiscal benefits by 2035, including CPEC-linked advantages. Export processing zones also face tighter domestic-sale limits, reshaping site-selection and industrial investment calculations.

Nuclear-led industrial competitiveness

France is deepening its nuclear-industrial strategy, including a €100 million Arabelle turbine factory and broader EPR2-linked expansion. With electricity around 10% cheaper than the EU average, France strengthens its appeal for energy-intensive manufacturing, export production, and long-term industrial investment.

High-Tech FDI Surge

Vietnam’s first-quarter 2026 registered FDI reached $15.2 billion, up 42.9% year on year, while disbursed FDI hit $5.41 billion, a five-year high. Capital is shifting toward semiconductors, AI, data centers, and green manufacturing, strengthening Vietnam’s strategic role in supply-chain diversification.

Corporate Investment in Strategic Sectors

Business support is strong for government investment in economic security, energy and other priority industries, with 79% of surveyed major firms backing the broader strategic-sector agenda. This favors semiconductors, digital infrastructure and advanced manufacturing, but may steer incentives and competition toward politically preferred industries.

Chabahar Uncertainty and Corridor Shifts

Sanctions uncertainty around Chabahar is reshaping regional logistics planning. India is considering temporary divestment of its stake before a waiver expiry, jeopardizing a strategic route to Afghanistan, Central Asia, and the North-South Transport Corridor, with implications for port investment and cargo flows.

Auto Sector Structural Reset

Germany’s flagship automotive industry faces a structural, not cyclical, reset driven by EV transition costs, weak China earnings, and Chinese competition. Combined first-quarter EBIT at Volkswagen, BMW, and Mercedes fell to €6.4 billion, threatening plants, suppliers, and regional employment.

Critical Minerals Supply Vulnerability

US efforts to reduce dependence on Chinese rare earths and strategic inputs are colliding with Beijing’s tighter licensing and broader coercive toolkit. Recent shortages affected auto supply chains within weeks, underscoring exposure in aerospace, electronics, defense-linked manufacturing, and energy-transition industries operating through the United States.

Higher Wage and Labor Costs

Annual shunto wage settlements reportedly exceeded 5%, including solid gains among small and medium enterprises. Rising labor costs may support demand over time, but near term they raise payroll burdens for employers and accelerate automation, restructuring, and location reviews across service and manufacturing operations.

Tighter Investment Security Scrutiny

CFIUS and broader national-security screening remain central to foreign investment in US strategic sectors. Reviews increasingly examine ownership structures, governance and technology exposure, lengthening deal timelines and complicating cross-border acquisitions, joint ventures and capital deployment in advanced manufacturing and infrastructure.

CUSMA Review and Tariff Uncertainty

Canada faces elevated trade uncertainty as CUSMA review talks slip past July 1 and U.S. Section 232 tariffs remain on steel, aluminum, autos and lumber. Prolonged negotiations risk delaying investment, disrupting cross-border sourcing, and complicating North American market planning.

Critical Minerals Processing Buildout

Canada is scaling domestic refining of lithium, cobalt and graphite to reduce external dependence and secure EV, defence and semiconductor supply chains. Recent projects include a C$20 million Electra refinery expansion and North America’s first commercial lithium refining facility in British Columbia.

PIF-Led Mega Project Demand

The Public Investment Fund’s assets reached about $909.7 billion, supporting giga-projects such as NEOM, Diriyah and Qiddiya. These projects generate major contract pipelines in construction, technology, tourism and services, while also raising execution, workforce and local-content expectations for foreign partners.

Storage Crunch Threatens Production

Iran reportedly has only 12 to 22 days of spare crude storage left. If tanks fill, forced shut-ins could cut another 1.5 million barrels daily and inflict lasting damage on aging reservoirs, worsening supply reliability and investment risk.

Fuel Inflation and Rate Risk

South Africa’s import dependence leaves businesses exposed to oil shocks and tighter monetary conditions. Petrol rose 14% to 26.63 rand per litre and diesel above 30 rand, increasing transport and food costs while raising the risk of prolonged high interest rates.

Critical Minerals Supply Vulnerability

US industry remains exposed to disruptions in rare earths, gallium, germanium, and other inputs as geopolitical tensions intensify. Chinese licensing and retaliation capacity threaten automotive, electronics, aerospace, and defense-adjacent supply chains, encouraging stockpiling, dual sourcing, and allied-country procurement strategies.

Fiscal Expansion Supports Infrastructure

Berlin is deploying unprecedented borrowing and special funds to revive growth and resilience. The government plans nearly €200 billion of borrowing next year and about €600 billion over the following three years, supporting infrastructure, defense, and selected industrial demand despite budget tensions.

Private sector localization tightening

Updated Nitaqat localization rules aim to create more than 340,000 additional Saudi private-sector jobs over three years, increasing compliance pressure on employers through stricter wage verification, visa restrictions, and tighter regional and sectoral workforce quotas.

Weak Growth and External Shocks

Britain’s macro outlook remains fragile as energy shocks, geopolitical conflict and weaker business formation weigh on demand. IMF projections cut 2026 growth to 0.8%, while first-quarter company formations fell 8% year on year and closures exceeded new startups by 4,500.

Weak Growth, Fiscal Stimulus

Thailand’s 2026 growth outlook has been cut to 1.5%-1.6%, prompting discussion of roughly 500 billion baht in new borrowing and broad consumer relief. For investors, this signals softer domestic demand, rising sovereign policy intervention, and potential pressure on public finances.

Escalating Sanctions Enforcement Network

Washington expanded pressure with sanctions on 35 shadow-banking entities and individuals, part of roughly 1,000 Iran-related actions since February 2025. The measures heighten secondary-sanctions exposure for banks, traders, insurers, and China-linked counterparties handling Iranian commerce.